Florida Governor Ron DeSantis Friday signed into law CS/HB 1347, a bill that significantly alters the state's consumer finance loan landscape.
This legislation, which builds upon previous efforts to regulate the industry, aims to attract more lenders to the Sunshine State while potentially impacting borrowers in both positive and concerning ways.
The newly signed CS/HB 1347, also known as the "Consumer Finance Loans" bill, introduces several key changes to the existing regulations governing consumer finance loans in Florida.
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The primary modifications include:
Increased Interest Rate Caps
The bill allows consumer finance loan companies to charge higher annual interest rates on certain loan amounts. Specifically:
- Up to 36% on the first $10,000 of principal
- Up to 30% on amounts between $10,000 and $20,000
- Up to 24% on amounts between $20,000 and $25,000
This represents a significant increase from the previous caps of 30% on the first $3,000, 24% on $3,000-$4,000, and 18% on $4,000-$25,000.
Supporters of the bill argue that these changes will help attract more consumer finance lenders to Florida, providing borrowers with a wider range of options and potentially more competitive rates.
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The driving forces behind the passage of CS/HB 1347 can be attributed to several key factors.
Proponents of the bill contend that the previous interest rate caps and loan amount limits had deterred some consumer finance lenders from operating in Florida, leaving borrowers with fewer options and potentially driving them towards higher-cost online or unregulated lenders.
The changes introduced by CS/HB 1347 are in line with a broader trend observed across the United States, where several states have raised interest rate caps and loan limits to attract more consumer finance lenders and provide borrowers with more choices.
Supporters of the bill argue that the higher interest rate caps and expanded loan amounts will benefit both lenders and borrowers.
Lenders will have greater flexibility to offer a wider range of products, while borrowers will have access to a more diverse range of financing options.
Correction: The original article stated: "The bill expands the maximum loan amount that consumer finance companies can offer, raising the ceiling from $25,000 to $50,000." This was excluded from this bill.
Under current law, consumer-finance loan companies can charge 30 percent annual interest on the first $3,000 of principal amounts, 24 percent on amounts between $3,000 and $4,000, and 18 percent on amounts between $4,000 and $25,000.
Under the bill, they can charge annual interest rates up to 36 percent on the first $10,000 of principal amounts, 30 percent between $10,000 and $20,000, and 24 percent between $20,000 and $25,000.
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