• The Florida House has approved a measure that would increase the maximum permitted interest rate on consumer finance loans from 30% to 36%.
• The bill, HB 1267, removes the tiered interest structure and requires annual submission of reports to the Florida Office of Financial Regulation (OFR) by licensees.
• Fernandez-Barquin, the bill’s author, stated that his legislation sought to expand the base of individuals deemed eligible for consumer loans.

The Florida House approved a measure on Thursday that would allow consumer finance loan interest rates to reach as high as 36 percent. If adopted, the legislation would amend the Florida Consumer Finance Act to allow for an increase to the maximum permitted interest rate on such loans.

The bill, HB 1267, introduced by Rep. Juan Fernandez-Barquin, establishes 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.

Under current state law, companies are permitted to apply a tiered interest rate structure to both secured and unsecured loans. As is, interest rates may reach a maximum of 30 percent on the initial $3,000 of principal, 24 percent on principal amounts between $3,000 and $4,000, and 18 percent on principal amounts ranging from $4,000 to $25,000.

On the House floor, Fernandez-Barquin targeted online lenders who are not bound by federal law, which he stated results in consumer loans with interest rates exceeding 200 percent. According to the representative, 45 percent of Florida’s consumer finance loans are facilitated by approximately 15 lenders.

“Online lenders are offering rates as high as 225 percent to Floridians with minimums as high as 99 percent,” said Fernandez-Barquin. “In 2022 alone there were 317,000 loans, totaling $3.006 billion. This bill seeks to help Floridians with obtaining and managing consumer loans.”

Appearing before the House Insurance & Banking Subcommittee in March, Fernandez-Barquin stated that his legislation sought to expand the base of individuals deemed eligible for consumer loans.

“Our constituents can currently go online and get loans for astronomical APRs,”  said Fernandez-Barquin. “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.”

He also claimed that rising inflation rates are making it increasingly difficult for consumers to obtain loans. Per his statement to the subcommittee, inflation makes the cost of borrowing more expensive, which he stated 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,” Fernandez-Barquin said. “This bill also includes certain reporting requirements that are not currently in the statute.”

A Senate companion bill, SB 580 by Sen. Joe Gruters, has cleared each of its three committee stops and has been placed on the chamber’s Special Order Calendar for May 1. If adopted, the House version of the bill would go into effect July 1.