Florida Payday Loan Laws & Regulations

The state of Florida is one of many that has instituted laws to regulate the payday loan industry. The rules in many states have effectively brought an end to payday loans. Florida has taken a more cautious approach and brought in laws to protect consumers while allowing payday loan companies to continue to operate.

The idea of a payday loan is fairly easy to understand, you borrow money until your next payday at which point you have to pay back the loan in full. The result is that the loans normally only last for a couple of weeks. There are a lot of people who view this type of loan as predatory which is why a number of states have now brought in laws to deal with them. The main reason that people have a problems with payday loans is the cost of them. If you figure out what they cost as an annualized interest rate they will run into the several hundred and in some cases thousands of percent.

The other reason that people have an issue with payday loans is that lenders would often create a situation in which people would have to constantly keep taking new loans. If you take a payday loan in which you are borrowing most of you paycheck you will find yourself with no money after you have paid back your loan. So what can you do besides take another loan. This puts you into a cycle that you will find nearly impossible to get out of. It will also cost you thousands of dollars over the course of the year.

In order to protect borrowers from the worst aspects of payday loans the state of Florida have enacted a number of regulations. They are that the loan may be for a period of between seven and thirty one days. The maximum that can be borrowed is five hundred dollars, and the maximum fees that can be charged is ten percent of the amount of the loan. That includes all fees and interest, although an additional verification fee can be charged as well, the size of which will depend on the amount of the loan.

There are a lot of people who would like to see stricter payday loan laws and regulations in the state of Florida. However the experiences of other states has shown that this may not be such a good idea. The problem is that if the laws become too restrictive they put the payday loan companies out of business. While many people would think this is a good thing it does leave a problem. There are a lot of people who actually rely on payday loans and have no other source if they need cash. For them it is important to keep payday loans available.