Florida Restrictions on Payday Loan Lenders

While payday lending is legal in Florida, state law provides strict limitations. If you have a problem with a Florida payday lender, you can turn to the state for assistance. But if you obtained the loan from an out-of-state lender, over the internet, or via phone, that help might be limited.

What Is a Payday Loan?

Typically, you can get a payday loan in a store by giving the lender a postdated check, in person by providing the lender access to your bank account, or online. The lender gives you money, and the repayment due date generally corresponds with the date of your next paycheck.

You'll have to pay interest, usually at a very high rate, and any allowed costs. The interest amount is often called a "fee." Most consumer advocates warn against using payday lenders because the interest and fees are exorbitant.

Payday Loan Lender Restrictions in Florida

Under Florida law, payday lenders are called "deferred presentment providers." (Fla. Stat. Ann. § 560.402 and following). Payday lending is limited in several ways. The law places limits on:

• the amount of the loan
• the number of loans you can have outstanding
• the length of the loan term
• the fees and costs that can be charged, and
• the collection process if you don't pay.

Amount of the Loan

In Florida, payday advances can't exceed $500—no exceptions. (Fla. Stat. Ann. § 560.404).

Number of Loans

You can only have one outstanding payday loan at a time. Loans are tracked through a central database. When you pay the loan back, you must wait out a 24-hour cooling-off period before taking out another payday loan. (Fla. Stat. Ann. § 560.404).

Loan Term

Payday loans can't be for fewer than 7 days or more than 31 days. Rollovers are also prohibited. ("Rolling the loan over" means you pay a fee to delay paying back the debt.) For example, if you take out a 14-day payday loan, the lender isn't permitted to roll the loan over, charging the fees again, for an additional 14 days—even though the entire length of time would be less than 31 days. The term is set when you take out the loan. But if you're unable to pay, you can extend the loan term without additional charges or interest. (Fla. Stat. Ann. § 560.404).

Grace Period

If you can't pay the loan in full at the end of the loan term, the lender has to provide a 60-day grace period without additional charge. The grace period depends on you making an appointment with a consumer credit counseling service within 7 days and completing the counseling within the 60-day grace period. (Fla. Stat. Ann. § 560.404).

The payday lender must give you a list of approved consumer credit counseling agencies affiliated with the National Foundation for Credit Counseling (NFCC) that provide credit counseling services to state residents in person, by telephone, or through the internet. (Fla. Stat. Ann. § 560.404).

Limitation on Fees

Florida law limits the lender's fees on a payday loan to 10% of the loan amount, plus a $5 verification fee. (Fla. Stat. Ann. § 560.404, § 560.309(8)).

Collection

If a check you provided to the payday loan lender doesn't clear the bank and you're unable to pay, the lender is limited in what it can do. The payday lender may not pursue criminal action against you for a bad check. They can demand payment, but costs are limited to the 10% fee, the $5, and any bad-check fees the lender's bank imposed (if you didn't inform the lender in advance that the check couldn't be honored). The lender can't charge additional costs unless it files a lawsuit and a court imposes additional costs. The lender may seek to recover interest on its judgment but is limited to the state's judgment rate generally and not a rate based on the payday loan fee. (Fla. Stat. Ann. § 560.404, § 560.406).

What Are Additional Restrictions on Payday Loans in Florida?

Florida law requires that the payday loan agreement be in writing and signed by both parties on the date the loan is given. The loan agreement must contain the following, among other things:

• the name and address of the lender and the lender's business office
• the name of the lender's representative who signed the agreement, and
• a clear description of the agreement, including the loan date, amount, loan term, and transaction number. (Fla. Stat. Ann. § 560.404).

The agreement can't legally contain terms whereby the borrower agrees to hold the lender harmless for any damages or actions, waives any rights under the law, agrees in advance to the entry of a judgment or wage garnishment, or waives any defenses to repayment. The fees allowed under the law may not be collected in advance, and the lender can't require any additional security or guarantors. Lastly, the lender has to provide a copy of the signed agreement to the borrower at the time of the transaction. (Fla. Stat. Ann. § 560.404).

Why Are There Restrictions on Payday Loans in Florida?

People who take out payday loans often end up getting one payday loan after another (again, called "rolling the loan over") when they can't repay the initial loan.

For example Taylor gets a $300 payday loan with a $50 fee, but can't repay it when the loan comes due. She pays another $50 fee to extend the due date. So, she'll have to pay $100 for a $300 loan. If she rolls the loan over again, she has to pay another $50. This payday loan has now cost Taylor $150, half of the original loan amount.

Remember, Florida law prohibits rolling over a payday loan. This law (and Florida's other restrictions on payday lending) protects people who might find themselves in the same position as Taylor in the example above. Still, as a general rule, it's best to avoid payday loans entirely. You probably have cheaper options are available for getting some money.

What Are the Alternatives to Payday Loans in Florida?

Rather than taking out a loan, you can look into other options, including:

• requesting an advance or an emergency loan from an employer, nonprofit organization, or community group
• getting a less expensive loan from your bank or credit union (if you belong to one), or
• asking a creditor or debt collector to reduce a debt you owe or give you some time to skip payments altogether.

However, you should generally avoid high-interest personal loans and car title loans.

How to Find a Responsible Payday Lender in Florida

If you find yourself in a tough spot and have no choice but to take out a payday loan in Florida (be sure to consider other alternatives first), ensuring you're dealing with a licensed lender is a good idea. The Florida Office of Financial Regulation's Division of Consumer Finance regulates payday lenders in the state. Go online to verify a payday lender's license.

Payday lenders licensed in Florida must comply with state laws and respond to inquiries by the Office of Financial Regulation (OFR) to maintain their license. If you have an issue with a lender, you can file a complaint on the OFR website or call 850-487-9687 if you have questions.

But if the lender isn't licensed in Florida and operates from another state or country through the internet or phone, the state might be unable to help you.

What to Do If You Are Having Trouble Repaying a Payday Loan

If you're having trouble repaying a payday loan, consider contacting the lender to find out about options. Remember, Florida law prohibits rolling the loan over (you can extend the loan term without additional charges or interest) and provides a 60-day grace period if you need it.

Also, seek assistance from an accredited, nonprofit credit counseling organization affiliated with the NFCC.

If you have a lot of debt that you potentially discharge (eliminate), you might want to consider filing for bankruptcy. In most cases, you can discharge a payday loan in Chapter 7 bankruptcy or pay some part of it in Chapter 13 bankruptcy (usually a small portion).

Getting More Help

Again, the Florida Office of Financial Regulation's Division of Consumer Finance regulates payday lenders in the state. You can verify a license or file a complaint on their website or call 850-487-9687 if you have additional questions.

You can also file a complaint with the Consumer Federal Protection Bureau (CFPB). The CFPB is the federal government's organization helps consumers with financial issues, including payday lending matters.

To get an explanation about applicable payday loan laws in Florida relevant to your situation, consider contacting a debt relief lawyer or a consumer protection lawyer.