Florida Legislature May Reinstate Higher Interest Rate Limit For Title Loan Companies
By Paul RizzoPayday Loan Writer
Gov. Jeb Bush signed a law six years ago that sharply reduced the interest rates car title loan companies (similar to payday loan firms) could charge customers in Florida. Title loans are like payday loans in that people who have bad credit and urgent debt problems put up collateral in exchange for instant cash — only in this case, it's not a postdated check, but their car title, which can be repossessed if the consumer doesn't pay.
According to the St. Petersburg Times, what was a 264 percent annual rate was slashed to 30 percent a year in 2000. But title lenders are lobbying the Florida State Legislature to return to the 264 percent limit.
Rep. Chris Smith, House Democratic leader, is pushing the higher interest rates and passed a committee vote Monday after making several changes that quieted some critics, including a $3,000 cap and lender financed credit counseling if the loans are extended for five months.
But as with payday advances, there are many people who stand opposed to such measures. Opponents say high-interest loans trap borrowers in a vicious cycle that can never be broken.
Lynn Drysdale of Jacksonville Area Legal Aid, which offers free legal assistance to those who cannot pay for it, criticized the bill and said her clients are working poor and elderly people who would dig themselves deeper in debt by turning to the high-interest loans.
Osjha Anderson of Select Management Resources of Alpharetta, Ga., a title loan company, called the 2000 law much needed, because the lending was unregulated.
"You passed a great bill, except for the interest rates were capped so low that there's not one title lender licensed in the state of Florida right now," Anderson said. "There are people in Florida that need these products."
She said that Florida has embraced short-term lending industry in the form of payday loan and pawn shops, and should do the same for title lenders.
Smith's bill (HB 1109) passed on a 5-4 vote. Its fate will now be in the hands of the full legislature, where its prospects of passage should be equally close. Florida has been friendly to payday loan companies, so it stands to reason that this bill has a chance.
But is it good for consumers? That's for the lawmakers, and the voters who elect them, to decide.
May 29th, 2006 at 2:10 pm
[…] Drysdale thinks that’s because payday loan lenders make most of the noise to the Legislature. This would explain why interest rate regulations on payday loans may soon be eliminated. Industry groups and individual lenders employ lobbyists every year to pitch legislation. Consumers, on the other hand, lack a unified voice. […]