Imagine that you need a loan fast. Maybe you didn’t get as many shifts at work as you needed, and you have to make rent. Maybe you saw a great price on a car, and need the cash now to get the deal. These situations give lenders the opportunity to charge high interest rates, because they know that the borrower may not have another place to turn for a quick loan. In order to protect consumers from imbalanced lending practices, Florida has passed laws to limit interest rates even though consumers still have the option to waive those protections. Extremely high interest rates are still illegal, and subject to criminal prosecution.
A summary of Florida interest rates laws is in the table below while an in-depth description follows. See Consumer Protection Resources and Interest Rate Laws for more information.
|Legal Maximum Rate of Interest||Determined by comptroller of state by averaging the discount rate of the Federal Reserve Bank of New York for the preceding year and adding 500 basis points to the averaged federal discount rate (§55.03)|
|Penalty for Usury (Unlawful Interest Rate)||All interest forfeited and repaid double (§687.04); criminal usury: credit at rate of 25-45% is misdemeanor with penalty of up to 60 days in prison and/or $500 fine; over 45% is 3rd degree felony; keeping the books/records for loan at 25% is 1st degree misdemeanor, and if loan or forbearance is criminal, debt is not enforceable (§687.071)|
|Interest Rates on Judgments||Set yearly by the state comptroller by averaging discount rate of Fed. Reserve Bank of N.Y. for the preceding year and adding 500 basis pts. to the averaged discount rate (55.03)|
|Exceptions||If specifically licensed in business and making loan (§516.031); on sale of motor vehicles (§§520.01, et seq.)|
Florida Maximum Interest Rate
Many states, including Florida, have passed laws that place limits on interest rates. Like many other states, Florida has a set interest rate, rather than an interest calculation. For loans of $500,000 or less, the interest rate is capped at 18% annually. For loans that are greater than $500,000, the interest rate is capped at 25%
Exceptions to the Interest Rate
Many people in Florida may be paying interest on credit cards or car payments that are higher than the stated maximum interest rate. This does not mean that your lender is necessarily violating the law. The maximum interest rate does not apply to national banks. These are banks with “National” or “N.A.” in their name. As well, people with pawnbroker licenses or small loan companies have other rules that apply. Generally, the maximum interest rate applies to loans between people or corporations, not banks.
Penalties for Violating Usury Laws
Interest rate regulation generally falls under consumer protection law. Florida also makes it a criminal offense to charge extremely high interest rates. In all cases, interest is forfeited by the lender, and repaid double. Charging interest rates of 25-45% is a misdemeanor punishable by up to 60 days in prison, and a $500 fine. Charging an interest rate greater than 45% is a class 3 felony. Keeping the books on a loan with an interest rate higher than 25% is a first degree misdemeanor. This means that record keepers are responsible for reporting high interest rates as well.
Many borrowers don’t know about the maximum interest rate until they have already paid it. Or, some may be paying a high interest rate, and don’t know if the interest rate laws apply to their specific loan. If you would like to know more about usury laws, or if you would like to discuss the specifics of your case with a legal professional, there are many attorneys throughout Florida with usury experience who may be able to help.