Lenders (banks, wealthy individuals, or corporations), make a profit from the interest they charge. Some lenders demand unfairly high interest rates that take advantage of the borrower; this act is called “Usury.” Usury is a legal term used to describe a predatory loan or line of credit that is offered to individuals that would unfairly enrich the lender.
When thinking about loaning money or taking out a loan, be educated on the laws that Florida has in place so you can make sure your loan is lawful.
Florida Statute 687 governing Commercial Regulations protects consumers from predatory lenders. The law caps interest rates for loans less than $500, 000 at 18% per year. Any loan over $500, 000 is capped at an interest rate of 25% per year. Keep in mind that these rates vary from state to state. These rate caps only apply if you are reading from the Sunshine State.
If you’re paying interest rates much higher than that on our credit cards or car payments, this does not mean the law has been broken; national banks are not subject to Florida law. The 18% and 25% maximums bind people loaning to other people or corporations loaning to other corporations in Florida, but exempting national banks.
There are harsh penalties for being caught attempting to give out one of these loans. Charging anywhere between 25-45% interest is punishable by up to 60 days in prison and a $500 dollar fine. A loan charging over 45% interest means the lender has committed a felony.
The responsibility carries over to accountants and bookkeepers. If they find a usurious loan in their client’s records they are required to report it or be subject to the same consequences as the lender who created it.
If you have taken out loans of any size, go back and double check what you are paying in interest. It is possible that you are not only being taken advantage of, but also the victim of a crime.
By Jake Van Loon