Florida recently enacted H1347, revising the state's criteria for what constitutes usurious consumer loans.
The Florida Consumer Finance Act prohibits charging an interest rate of more than 18% per year on a loan of $25,000 or less. The new law revises the current rules for certain exceptions to this 18% cap. The updated exceptions change the maximum interest rates that lenders can charge on different portions of a loan, depending on the amount borrowed.
Here is how the new limits work:
- For the first $10,000 borrowed. The interest rate can be up to 36%.
- For the portion of the loan between $10,000 and $20,000. The interest rate can be up to 30%.
- For the portion of the loan between $20,000 and $25,000. The interest rate can be up to 25%.
The Act extends the period before a delinquency charge can be imposed from 10 to 12 days after default. It also revises lender obligations during a FEMA disaster, requiring the suspension of delinquency charges, repossession of loan collateral, and civil actions for loan collections. Additionally, lenders must notify the Office of Financial Regulation if any assistance programs are impacted by a FEMA disaster and provide annual reports on loans issued during the previous year.
Putting It Into Practice: The law became effective as of July 1, 2024. Lenders that operate in Florida should review the law’s requirements and ensure their practices comply with its directives.