Florida House panel OKs bill to increase maximum interest rate on consumer loans

A House panel Monday approved a bill that would increase the maximum interest rate on consumer finance loans, while placing additional requirements on the industry.

The House Insurance & Banking Subcommittee unanimously backed the bill (HB 1267), sponsored by Rep. Juan Alfonso Fernandez-Barquin, R-Miami-Dade County.

Under current law, consumer-finance loan companies can charge 30 percent annual interest on the first $3,000 of principal amounts, 24 percent on amounts between $3,000 and $4,000 and 18 percent on amounts between $4,000 and $25,000. The bill would set an across-the-board maximum 36 percent rate.

Fernandez-Barquin said many borrowers now get loans through online sites that charge higher rates. He said the loans are often used by people who do not have bank accounts and have poor or no credit.

In addition to allowing a higher maximum interest rate, the bill, in part, would place new reporting requirements on consumer-finance loan businesses.

But it drew opposition Monday from groups such as the Florida Conference of Catholic Bishops and the Florida Center for Fiscal & Economic Policy because of the higher maximum interest rate.

The Senate Banking and Insurance Committee is scheduled to take up its version of the bill (SB 580) on Wednesday.