Payday loans are marketed as one time ‘quick fix’ consumer loans – for folks facing a cash crunch. In reality these loans create a long term cycle of debt, and a host of other economic consequences for borrowers. Studies have shown that payday borrowers are more likely to have credit card delinquency, unpaid medical bills, overdraft fees leading to closed bank accounts, and even bankruptcy.
Video: What are payday loans and why are they bad for the community (English/Spanish)
Quick Facts: Payday Lending in Florida
Florida law allows payday loans up to $500 for a term of 7 to 31 days; fees may be up to 10% of the loan amount plus a verification fee.
The Annual Percentage Rate Interest on a payday loan in Florida, on average, is 20 times the criminal usury rate of 18%.
Florida’s payday loans are no model for the country – problems abound - including no determination of the ability for the consumer to repay the loan, no limitation on the number of loans a consumer may take out in a year, and a cooling off between loans that is too short to be meaningful. These are issues to be addressed by the Consumer Financial Protection Bureau. But what Florida can do is place a rate cap on loans to provide a fairer and more affordable financial product.