A payday lender provides a short-term loan in exchange for a person's check and a fee. The lender agrees to hold the check for a period of time before depositing it.
In Florida, the Florida Office of Financial Regulation's Division of Consumer Finance regulates payday lenders. You can verify a license or file a complaint on the OFR website or call (850) Its Your Money (850-487-9687), if you have additional questions.
Consumers who take out a payday loan from a licensed lender are entitled to the following protections under Florida law:
A borrower may borrow up to $500 per loan.
A borrower may only have one outstanding loan at any time. This is tracked through a statewide database of all loans taken out.
The maximum fee is 10 percent of the amount borrowed plus a $5.00 verification fee.
The loan term cannot exceed 31 days or be less than 7 days.
Certain contract terms that limit a borrower's rights are prohibited.
A borrower must pay a previous loan in full and wait 24 hours before entering into another loan. This period is designed to prevent loans from being rolled over into new loans and to give consumers the opportunity to consider other financial alternatives.
If at the end of the loan term, the borrower is unable to pay the loan in full, the loan provider must provide a 60-day grace period without additional charge. The grace period is dependent upon the borrower making an appointment with a Consumer Credit Counseling Service within 7 days and completing the counseling within the 60-day grace period.
Remember, Before You Take Out a Payday Loan:
Consider alternative solutions
Ask about delaying or making payment arrangements on your non-interest bills such as telephone and utility bills.
Talk to a friend or family member about borrowing money.
Ask your employer for an advance on your paycheck.
Set aside savings each month for future emergencies.
Verify a license on the OFR website or by calling (850) Its Your Money (850-487-9687), option 1.
Especially be careful to check the license if the payday lender is doing business online. Dealing with unlicensed Internet companies makes it difficult to resolve potential problems, and these companies may be located outside the United States.
Be wary of other short-term products that mimic payday loans, such as installment loans, open-ended lines of credit and auto title loans, which may use automated clearing houses or electronic transfer every two weeks.
Comparison shop for the lowest fees and penalties.
Borrow only what you can afford to pay back.
Know when your payment is due and be sure to repay the loan on time and in full.
Take advantage of local non-profit organizations across Florida that are available to help you with your financial situation. Many of these organizations offer help with budgeting, credit repair, debt repayment and more. Contact your local consumer credit counseling service, asset building coalition or United Way.
Set up a budget. Plan for the future by making a realistic budget to help avoid the need to borrow for emergencies and unforeseen expenses. Free budgeting worksheets are available on www.mymoney.gov.