Know The Fees And Interest Rates A Title Loan Lender In Florida Can Charge
Car title loans can be a lifesaver for borrowers in Florida who can't qualify for a traditional loan offer. They offer a way to borrow more than $1,000 without much of a credit check, and some borrowers may be approved for higher loan amounts using a high-value vehicle as collateral. However, before you sign off on a loan, it's crucial to know how much you'll pay in interest and other fees with a car title loan.
The main drawbacks of any title loan in Florida revolve around the interest rates and, of course, the fact that your vehicle can be repossessed if you miss a payment. While each company sets its own rates and terms for each customer, they must comply with all applicable state regulations. For title loans in Florida, these laws are outlined in the Florida Title Loan Act. Under this law, a lender may charge a maximum APR of 30% on the first $2,000 of the loan principal. The APR is capped at 24% for amounts between $2,000 and $3,000 and lowered to 18% for amounts over $3,000. Keep in mind that not all title loan companies in Florida follow these regulations, and it's essential to ensure your lender is licensed and registered as a title loan company in the state.
It's also important to note that interest on Florida title loans is calculated as simple interest and does not compound. That means you'll only be charged interest on the outstanding principal balance.
The following fees apply to title loans in Florida:
-Loan Processing Fee. Florida law requires all fees to be clearly disclosed in your loan agreement. If you are assessed a loan processing fee, it must be "reasonable" and can not be used to offset the interest rate caps set by Chapter 537.
-Late Fee. A late fee may be assessed if a payment is not made by the due date. All late fees must be clearly disclosed in your loan agreement before you sign.
Repossession Fees and Vehicle Storage Charges. If your vehicle is repossessed, the lender may charge a reasonable fee for the repossession and storage. Florida law requires the lender to send a notice of Right to Redeem that outlines the steps you can take to get your vehicle back before it's sold. Any surplus proceeds left over after your initial loan amount and "allowable costs" are satisfied will be returned to you within 30 days.
Interest Rates And APR For A Florida Title Loan
For example, if you take out a $1,000 Florida title loan, you would be required to repay the principal plus interest and applicable fees. At the maximum allowable rate of 30% per year, a $1,000 title loan would accrue approximately $300 in interest over 12 months, assuming no additional fees. The actual repayment amount depends on your loan term and the fees disclosed in your loan agreement.
On a $5,000 title loan, the tiered interest rate structure would apply as follows: 30% per year on the first $2,000, 24% per year on the next $1,000, and 18% per year on the remaining $2,000. At maximum rates over 12 months that would equal approximately $600, $240, and $360 respectively, for a total interest cost of around $1,200 before any additional fees."
The total amount owed can be much higher than what you initially borrowed. If you do not repay your loan on time, your lender may report late payment charges to credit bureaus, which could damage your credit score.
Late payment fees in Florida can add up quickly, so it's best to make regular payments on time or let your lender know if you can't make a payment by the due date.
Borrowers may also see the following fees when they take out a title loan in Florida:
Documentary Stamp Tax - a Documentary Stamp Tax may be assessed in connection with a title loan. This tax is not charged in every case; you can sometimes bundle it with other fees into your total amount borrowed. This is a state tax assessed on certain loan documents and promissory notes in Florida. The amount for this fee ultimately depends on the face value of your loan agreement.
Lien Filing Fee - There may be a small fee assessed by the Florida DHSMV when adding a lender as a lienholder to your vehicle. This fee is typically a pass-through cost that appears in your loan documents.
Vehicle Inspection Fee - Some lenders charge a fee to inspect the vehicle. This is more common for mobile inspections.
Returned Payment Fee - Similar to any other automatic payments you have set up, if your payment is returned due to insufficient funds, your lender may charge a returned check or ACH fee.
While we've listed a few fees above that can be assessed with a title loan, it's important to mention what lenders are prohibited from charging. Under Chapter 537 of the Florida lending laws, lenders can not sell or charge insurance in connection with a title loan. They can't charge pre-payment fees if you pay off your loan early, and a licensed lender cannot add fees after the fact or charge anything that's not explicitly outlined in your loan agreement.
While Florida Title Loans does not issue title loans directly within Florida, we stay informed on current regulations governing interest rates, fees, and repayment terms. Call us at 888-986-8505 to start a title loan application and get an estimate from a licensed lender in Florida.