The days of 264 percent annual interest rates on car title loans are over, under a bill signed into law Thursday by Gov. Jeb Bush.
The law slashes the amount of interest title loan lenders can charge to 30 percent annually. Consumer advocates, who have called title loan lending "legalized loan-sharking," say the new limits will protect desperate people from falling deeper into debt.
Holding the car titles as collateral, title loan companies grant quick loans to the owners at interest rates of up to 264 percent per year. If a car owner falls behind on the payments, the company takes the car.
"I am pleased to sign a bill into law that corrects a situation that has existed in our state where people in need of money would seek a loan, and instead end up deeper in debt and deeper in trouble," Bush said Thursday in Orlando, where he signed the measure.
Thirty-six Florida counties have their own ordinances limiting title loan interest, setting interest rate caps ranging from 18 percent a year to 30 percent. Pinellas and Citrus counties are among those that don't have ordinances and will be most affected by the new limits.
In Pinellas County, home to about 60 title loan lenders, county commissioners had pledged to adopt an ordinance if the Legislature did not do so this year.
Hillsborough County passed a 30 percent limit on title loan lenders in May _ after which most lenders closed up shop. Hernando and Pasco counties have weaker ordinances that will be trumped by the statewide measure.
The new title loan law requires the state Department of Banking and Finance to regulate the industry. It allows the state to seek criminal penalties against lenders who violate the new rules.
The industry claims it won't survive under the new limits, primarily because title loan lenders cater to high-risk customers that banks won't touch. Without title loans, industry representatives say those customers will have even fewer options for borrowing cash.
Led by state Rep. Bill Sublette, an Orlando Republican, the House approved limits on the title loan industry for the past two years. Florida Legal Services, which advocates for poor and elderly clients, also pushed for the changes.
But the proposal stalled in the Senate, mainly due to objections from Senate dean W.D. Childers, R-Pensacola.
This year, Senate President Toni Jennings and Majority Leader Jack Latvala, R-Palm Harbor, made the limits a priority. Childers, who is being forced from office by term limits, did not oppose the measure.
_ Information from the Associated Press was used in this report.