• House Bill 1267 seeks to raise the maximum interest rate on consumer finance loans from 30 to 36 percent.
• The bill would eliminate the tiered interest structure and require an annual submission of reports to the Florida Office of Financial Regulation by licensees.
• The proposed changes aim to widen the number of people who qualify for consumer finance loans and prevent them from resorting to loan sharks.
• The bill was unanimously approved by the House Insurance & Banking Subcommittee on Monday and will move to the State Administration and Technology Appropriations Subcommittee, as well as the Commerce Committee.

House Bill 1267, introduced by Rep. Juan Fernandez-Barquin, seeks to amend the Florida Consumer Finance Act to allow for an increase to the maximum permitted interest rate on consumer finance loans.

The legislation posits an increase to the maximum interest rate for a consumer finance loan from 30 to 36 percent, removing the tiered interest structure altogether, and requiring annual submission of reports to the Florida Office of Financial Regulation (OFR) by licensees.

Currently, the Florida Consumer Finance Act prohibits individuals and entities from making consumer finance loans without first being authorized to do so. The Act also allows licensed lenders to make secured or unsecured loans up to $25,000 with a tiered interest rate structure. The maximum annual interest rate allowed on each tier decreases as principal amounts increase.

“The reason here is very simple,” said Fernandez-Barquin. “Our constituents can currently go online and get loans for astronomical APRs. Right now, these individuals who are unbanked are more than likely using illicit funds from an illegal vendor – what I would call a loan shark. This bill will widen the number of people who qualify and would otherwise be subjected to higher APRs.”

The bill appeared before the House Insurance & Banking Subcommittee on Monday morning, where it was unanimously approved. It will now move to the State Administration and Technology Appropriations Subcommittee, as well as the Commerce Committee, where committee members will weigh whether or not to bring the measure to the House floor.

Fernandez-Barquin further claimed that rising inflation rates are making it increasingly difficult for consumers to obtain loans. According to his statement to the subcommittee, inflation makes the cost of borrowing more expensive, and this affects people’s ability to pay back loans.

“The increase in interest rates have now made people that would have otherwise capable of qualifying for these loans … now not so much, because of these interest rates,” continued Fernandez-Barquin. This bill also includes certain reporting requirements that are not currently in the statute.”

According to the Florida House’s legislative analysis, the proposed changes by HB 1267 have an indeterminate fiscal impact on the private sector.