Prior to 2000, the average interest rate on car title loans in Florida exceeded 200% per year. In response to this, the Florida legislature passed the Florida Title Loan Act in 2000. The goal of the Act is to protect consumers in financial straits who take out car title or other types of title loans. It places limits on interest rates that title loan lenders can charge, requires a written contract containing certain information, and provides some other protections.
Title loans are short term, high interest loans with little risk to the lender and substantial risk to the borrower. Although they are not consumer-friendly, title loans remain popular with consumers because they don't require a credit check or proof of income.
blurbblurb(For more articles about consumer protection laws in Florida, visit out Florida Debt Management and Consumer Protection Center.)
A title loan is a cash loan to the owner of titled personal property (usually a motor vehicle) where the title to the property serves as security for repayment of the loan. The loan is a short term, high interest loan. If you don’t pay on time, your property is repossessed and sold to satisfy the obligation. There is often minimal risk to the lender as the amount of the loan given is usually far less than the value of the vehicle.
There are two Florida laws that govern title loans. The law that is applicable to your transaction depends on which law the lender is licensed under.
Florida Statute 537. The law passed in 2000, Florida Statute 537, is thought to provide more protection for the consumer because it has more specific restrictions on repossession, sale, and extra charges imposed by the lender.
Florida Statute 516. Many lenders, however, are licensed under Florida Statute 516, which governs consumer lending generally and is not restricted to title loans. While this statute provides consumer protections, it is less specific and does not set out the particular requirements for compliance.
Unless specified, the below laws apply to lenders licensed under either Florida Statue 537 or 516.
In Florida any titled personal property, other than a mobile home which serves as the borrower's primary residence, can be used for a title loan.
Florida title loan agreements must be in writing under both statutes. Under 537, the agreement must include
The title lender must provide you with an exact copy of the fully executed (signed by both parties) agreement at the time of the transaction.
The maximum interest rate that can be charged on title loans in Florida is:
Interest must be calculated as annual simple interest and not compounded. If a lender intentionally collects interest over the allowed percentage rate, the title loan agreement is voided and the lender forfeits any right to collect any amounts, including principal, owed on the loan.
In Florida, the term is limited to 30 days under Florida Statute 537 but may be extended if both parties agree in writing. The loan term can be extended for one or more 30-day periods. The interest rate charged for any extension may not exceed the interest rate in the original agreement. No interest due or owing on the original agreement or prior extensions may be rolled into principal for the purposes of an extension agreement.
The lender may take possession of the titled property if you fail to pay the amount due at maturity or any extensions and fail to make a payment within the 30 days thereafter.
Borrower rights. Florida Statute 537 details rights of the borrower and obligations of the lender in connection with repossession and sale. The lender must:
You have the legal right to redeem the titled property by paying the total amount due by money order or cashier’s check at any time prior to sale. You also have the right to bid at the sale.
Under Florida Statute 537, a title loan lender doing business in Florida is prohibited by law from: