Throughout the state of Florida, borrowers will find that title loans are generally legal, but interest rates are capped at 30%. There’s also not really a limit placed on how much consumers can borrow, but the state does adhere to strict loan regulations designed to protect borrowers from excessive borrowing and high fees. These regulations also prevent lenders from giving consumers more money than they can handle. Pink slip lending is regulated statewide by The Florida Title Loan Act (Chapter 537).
Vehicle Title Lenders Must Follow Legal Regulations In Florida
Borrowers who wish to get a title loan in Florida must have a current and valid state issued driver’s license, be over the age of 18, and own an automobile titled in their name. Many lenders also have restrictions on things like the make, model, and mileage on the vehicle and while it’s not a Florida requirement, applicants are usually asked for proof of their ability to pay off the loan. This includes proof of income, like a pay stub or a bank statement. In terms of interest rates, the 30% cap applies to the first $2000 of the loan, 20% for any amount between $2000 and $3000, and 18% for any amount over $3000. The maximum term on these loans is 30 days, but borrowers have an unlimited amount of extensions available to them every 30 days. To make the numbers a little easier to understand, let’s break down what a small loan for, say, $1000 is going to look like for the borrower. If they extend the loan to cover a period of one year, then they’ll be required to pay back $1000 plus $300 at the end of the term. If, however, they pay off the loan in one month, they’ll pay $1000 plus approximately $25.
Once again, there are strict rules in place within the state of Florida to ensure that borrowers are protected from unfair lending practices. Lenders aren’t allowed to sell or even require insurance with a title loan, and they can’t do things like advertise “interest-free” loans or “no finance charges”. They’re also banned from charging prepayment penalties, refusing partial payments, or lending to anyone who’s under the influence of drugs or alcohol.
What if I can’t pay back my loan on the due date?
If a borrower cannot pay back his or her loan, Florida lenders can repossess and sell their car to pay off their balance, but they’re required to give the borrower ten days’ notice before the sale. This gives the borrower one final opportunity to settle and pay off the loan before losing their car for good if the lender permits this which, in most cases, they will. Also, the lender is only allowed to use the funds retrieved from the sale to pay off what the borrower owes and any associated fees attached to the repossession and sale. If there’s a remaining balance, this must go back to the borrower within thirty days of the sale and if they have to go to court to pick up the balance, the lender is required to cover those legal fees.
Borrowers will want to make sure they ask upfront what a lender’s policies are on repossession and sale procedures and whether or not they can get their car back before it’s sold. Once again, this is generally something that lenders will allow, but this stipulation falls under Chapter 516 which doesn’t have as many protections as Chapter 537. Lenders are required to provide written statements on amounts borrowed and interest rates, but repossession procedures, sales procedures, and what lenders can charge for these are not as clear or specific.
Filing a complaint
Finally, if a borrower wishes to file a complaint about their title loan servicing company, they can do this by contacting the Florida Office of Financial Regulation online: https://www.flofr.com/, or by calling 850-487-9687. Additionally, they can file a complaint with the Attorney General’s Office online at www.myfloridalegal.com or by calling 1-866-9-NO-SCAM.