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AN OVERVIEW OF FLORIDA CASH ADVANCE/PAYDAY LOAN LAWS

Everyone goes through financial difficulties, and sometimes it seems as though the only option is to make a cash advance against the credit card or take out a payday loan. In Florida, cash advance is authorized but payday lending is not.

1. CASH ADVANCE

Florida has implemented a few regulations for the protection of lenders and consumers alike regarding cash advance:

  • Maximum Loan Terms: 7-31 days. Keeping a loan term from running too long ensures that, repayment will start at a set time and the loan will end at a set time. States without loan term limits have the potential of allowing lenders to indefinitely extend the loan. Interest fees also pile up and the borrower eventually finds the loan harder to pay.

  • Maximum Loan Amount: $500. By setting a limitation on the initial loan, the law helps consumers keep down the total they will owe at the end of the loan period. This is also for easy repayment.

  • Maximum interest: 10% + verification fee. It is one of the lowest in the country.

  • The Annual Percentage Rate for a two-week loan in the amount of $500 is 390%.

  • Additional Processing Fees: Any other fees cannot exceed $5 plus 10% of the loan amount.

  • Loan rollover: Refinancing of one cash advance with another is not allowed in the state of Florida.

  • Enforced Repayment Plan: For those taking a cash advance in Florida and having trouble with the repayment at the end of the loan, the government has mandated that a structured repayment plan be set up in which the borrower can successfully move out of debt.

  • Grace Period: if a borrower cannot repay a payday loan by the due date, the creditor must extend a 60-day grace period to the consumer before collecting. This is allowed only if the borrower attends credit counseling and enters into a payment plan with the cash advance company.

  • Any one borrower cannot have more than one loan out at a time. A borrower can only take out one cash advance at a time.

  • 2. PAYDAY LOANS

    The financial crisis has fueled the rise of the payday loan industry. Payday lending is illegal in Florida but a few options are available under the specific restrictions. Payday loans are one of the most common and easiest loans that offer upfront cash. Here are some regulations in Florida:

  • - Lenders cannot confiscate your wages in return for an unpaid loan.

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  • - No criminal action can be taken against a borrower who is unable to pay.

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  • - Lenders cannot charge in excess of the 18% Annual Percentage Rate. This limit of 18% applies to all situations that are related such as cash advances, debt collection, and credit lines. Both direct and indirect interest rates, advances, discounts, commissions, and exchanges are included in the limitations under Florida state law. This specific law is not applied to any loan that is more than $500,000. The law is also not applicable to loans relating to mortgages dealing with the Veterans Administration, Federal Housing Administration insurance, or other various types of mortgage divisions, as well as any loans that were made before 1979.

  • The Lending company will also require you to write a postdated check which is meant to be cashed at a later date, when your paycheck will cover the cost of the loan plus the allowable charges and interest.

    The lender will usually deposit the money into your bank account. Unfortunately, some lending companies often find ways to add on extra charges on your payday loan.

    When a financial situation occurs in the family, remember to check the reputation of the lending company that you would be dealing with.