Car title loans could be an easy and relatively painless way to get cash quickly. But before signing on the dotted line, it’s important to understand Florida title loan laws and your rights. The state introduced title loan laws to protect consumers and reviewing these laws can help you make better financial decisions.
But what exactly is a title loan?
Acquiring a Title Loan in Florida
Put simply, a title loan is a way of borrowing money using your vehicle as collateral. Some lenders require you to pay the money back within 30 days, but others will allow you to extend the loan even longer. The good news is that most title loan lenders will let you keep your vehicle, allowing you to drive without any disruption to your daily life while repaying.
With all this in mind, the state of Florida added Chapter 537 to the 23rd statute, the Regulation of Trade, Commerce, Investments, and Solicitations. Known as the Florida Title Loan Act, it outlines regulations for lenders and provides a useful resource for anyone needing to know their rights.
Firstly, before you even apply for a title loan, make sure the lender is licensed in the state of Florida. Each location must also be separately licensed, so if the lender has three offices in your city, they must each have their own license.
The license itself should be clearly visible – in other words, you shouldn’t have to ask to see it! Look for it on a wall or other prominent location, and make sure it’s valid. Licenses must be renewed every two years and a lender can’t give you a loan without first having a valid license.
You can also verify a lender’s license by contacting the Florida Office of Financial Regulation. They’re online at flofr.com or you can call them directly at (850) 487-9687.
What Information Is On the Florida Title Loan Contract?
The state of Florida clearly outlines what information must be included on the title loan agreement – that’s the contract itself. Let’s start with the vehicle details.
The contract should state:
- Vehicle make
- Vehicle model
- The year of manufacture
- The vehicle identification number (VIN)
- And, if applicable, the vehicle’s license plate number
The vehicle’s mileage is not required.
In terms of you, the borrower, the contract should include:
- Your name
- Your address
- Your date of birth
- Your Social Security Number
Perhaps unusually, it should also include a physical description of you, the borrower (although it provides no guidelines on how that should be written). Similarly, the contract should also state the type and the number of the ID you used (such as a driver’s license).
Next, there are the terms of the title loan.
The contract should state:
- When the Loan was Initiated: The date the contract was signed, and the loan funded
- The Amount Borrowed: You’ll see this stated as the “amount financed” on the contract. This is also known as the principal.
- Maturity Date of the Loan: This is when the loan is scheduled to be paid off in full. Florida law states the maturity date should be 30 days after signing, but also allows for it to be extended (in 30 day increments) if both you and the lender agree.
Unless you’re borrowing from friends or family, no loan is ever free and the lender will be making money on the deal. Commonly known as interest, this is legally known as the “finance charge” and must be clearly stated on the contract. Think of this as the cost of borrowing money.
The actual interest rate, represented as a percentage, must also appear on the contract. Known as the annual percentage rate (or APR), this indicates the interest rate charged on the remaining principal for each year you keep the loan.
For example, if you borrow $1,000, that’s the principal at the time you take out the loan. If you immediately pay back $250 of the principal, that leaves $750 remaining. The amount of interest is then calculated based upon the $750, not the $1,000.
How much will you have to repay? If you add the amount financed (amount you borrowed) and the finance charge (interest), you’ll have the total loan amount you’ll pay back if you stick to the agreement and make payments on time. If you’re late, the total you pay back could be higher.
What’s in the Small Print of a Title Loan Contract, According to Title Loan Laws in Florida?
The contract should always state the name and physical address of the lender. In case you have any complaints, the name, address and phone number of the Department of Financial Services should also be clearly printed.
Contracts have a bad reputation for including important information in “the small print.” Florida law clearly states that certain information should be printed in a font large enough to be easily read. Besides specifying what happens if you don’t pay back the loan (see below), the contract must also state that you must notify the lender if you lose your copy of the contract.
The title loan contract must also include a paragraph where you agree that the vehicle is not stolen, that you’re legally able to take out the loan, and that you won’t try to get another copy of the title before the loan has been repaid in full. (That’s to prevent you from trying to get a second loan from another lender!)
Both you and the lender must sign the contract. The lender is also required to provide a copy of the contract to you at the time of signing (not later!) and keep a physical copy of the contract for at least two years after the loan has been repaid.
Depending on the lender, you may also be required to surrender the vehicle to the lender. The vehicle should be securely stored at the lender’s location. Once the loan is repaid in full, the vehicle can be returned to the borrower.
How Much Are You Paying for Your Loan?
Here’s where things get a little complicated. If you’re borrowing $2,000 or less, the lender could charge you up to 30% interest over the course of a year. If you’re borrowing up to $3,000, the lender could charge you no more than 24% for that additional thousand, and no more than 18% on anything over $3,000.
For example, if you borrowed $3,500, you could be charged 30% on the first $2,000, 24% on $1,000, and 18% on the remaining $500. In other words, if you were to extend the loan to 12 months, you’d pay $339.69 for the $2,000, another $134.72 for the $1,000, and $50.08 for the $500.
This brings your total interest charge to $524.49. If you were to borrow $3,500 and pay it back over 12 months, you’d be paying back $4,024.49 in total. (Click here to try different loan amounts.)
If you’re late on your title loan payment, the lender is legally entitled to repossess your vehicle and sell it at auction. However, you still have rights. For example, the lender must tell you they’re attempting to repossess your vehicle and give you a chance to surrender it and remove any personal items.
If your vehicle is repossessed, you should also be given an opportunity to repay the loan (plus any expenses associated with the repossession) to reclaim your vehicle before it’s sold. The lender should also notify you at least ten days before the sale and provide a breakdown of what’s owed.
If the worst happens and your vehicle is sold, the lender can take what you owe from the proceeds. This can also include the cost of repossessing the vehicle. However, if there are any proceeds remaining, the lender must pay it to you within 30 days of the sale.
What’s Illegal in the State of Florida?
Beyond the rules outlined here, a lender can’t force you to waive any of your rights, sell you insurance, refuse partial payments, or charge you a prepayment penalty. In other words, if you want to pay off the loan early, the lender can’t penalize you by applying any additional fees or charges.
The title loan lender is also required to remove their lien on the car title once the loan has been repaid in full. If the vehicle was repossessed, the lender is also responsible for ensuring the vehicle is kept safe and secure.
If you’d like to learn more about title loan laws in Florida and your rights, it’s worth reading the Florida Title Loan Act online at Online Sunshine, the website for the Florida Legislature. The Florida Office of the Attorney General also has some valuable advice
If you’re in need of money and you can comfortably make the payments, a title loan in Florida could be the perfect solution for you. There’s no reason why you shouldn’t explore this option further. To start the process for a quick and easy loan1, apply for a ChoiceCash Title Loan serviced by LoanMart today!