What Is a Pay Day Loan?
A payday loan is an advance payment on a post-dated check you provide to the lender. The lender gives you money and you provide a signed repayment check which is generally dated to correspond with the date of your next paycheck. The post-dated check is for the amount the lender advanced to you plus interest (usually at a very high rate) and any allowed costs. The interest amount is usually called a fee. The lender agrees not to deposit your check until the agreed upon date shown on your signed check.
Most consumer advocates warn against using payday lenders because the interest and fees are exorbitant.
Use a Florida Licensed Lender
If you find yourself in a bad spot and have no other choice than to take out a payday loan in Florida, it is a good idea to make sure that you are dealing with a licensed lender. Payday lenders licensed in Florida must comply with the state laws and respond to inquiries by the Office of Financial Regulation in order to maintain their license.
If you have a problem with a payday lender, you can file a complaint with the state and request assistance. But if the lender is not licensed in Florida, and is operating from another state or country through the Internet or telephone, there may be little the state can do.
Limitations on Payday Lending in Florida
Payday lending is limited in several ways in Florida. The law places limits on
- the amount of the loan
- the number of loans you can have outstanding
- the length of the loan term
- the fees and costs that can be charged, and
- the collection process if you don’t pay.
The amount of the loan. In Florida, payday advances cannot exceed $500. There are no exceptions.
A number of loans. You can only have one outstanding payday loan at a time. Loans are tracked through a central database. When you pay back the loan, there is an additional 24-hour cooling-off period before you can take out another payday loan.
Collection. If the check you provided to the payday loan lender does not clear the bank and you are not able to pay, there are limitations on what the payday lender can do. The payday lender may not pursue criminal action against you for a bad check. They can demand payment but costs in are limited to the 10% fee, the $5 cost and any bad check fees imposed by the lender’s bank (if you did not inform the lender in advance that the check could not be honored). No additional costs may be charged unless a lawsuit is filed and additional costs are imposed by the court. The lender may seek to recover interest on its judgment but it is limited to the judgment rate in the state generally and not a rate based on the payday loan fee.