How Do Title Loans Work in Florida?
Yendo
April 13, 2023
How Title Loans Work in Florida
For Floridians in need of quick cash, title loans can be an option to consider, though they do come with financial risks. These loans allow individuals to use their vehicle as collateral, offering a way to borrow money based on the value of a car or truck.
However, before diving into a title loan agreement, it's essential to understand how they work and the potential risks involved because they can be costly for consumers, potentially perpetuating a cycle of debt [3]
What are Car Title Loans?
Title loans are a type of short-term loan where the borrower uses the title of their vehicle as collateral to secure the loan. These loans are often used by people who need quick cash for emergencies or unexpected expenses.
In Florida, title loans can be for amounts ranging from $250 to $10,000, with repayment terms usually set at 30 days but can be extended with mutual consent.
How to Apply for a Title Loan in Florida
To apply for a title loan in Florida, follow these steps:
- Ownership: Ensure you own the vehicle outright, with a clear title and no liens against it.
- Application: Complete an application, either online or in person, providing personal information, details about the vehicle, and proof of income. Most lenders do not require a credit check for title loans.
- Vehicle Inspection: The lender will typically inspect the vehicle to determine its value, which will help determine the loan amount you are eligible for. The amount of the loan generally depends on the value of the vehicle and your ability to repay the loan.
- Loan Agreement: Once the loan amount is determined, you will sign a loan agreement, which outlines the terms and conditions of the loan, including the interest rate, repayment schedule, and any fees associated with the loan.
- Vehicle Title: You will hand over the vehicle title to the lender, who will keep it as security for the repayment of the loan. You can still drive your vehicle during the loan period.
Interest Rates and Repayment for Title Loans
Florida law allows title loan lenders to charge interest rates based on the amount borrowed. For the first $2,000 borrowed, the maximum annual interest rate is 30%. For amounts between $2,000 and $3,000, the maximum rate is 24%. For any amount over $3,000, the maximum rate is 18%.
It's crucial to understand how much you will have to pay, including interest, before committing to a title loan. [1]
Risks and Alternatives
One of the significant risks associated with title loans is the possibility of losing your vehicle if you fail to repay the loan.
If you cannot make the payments, the lender can repossess your vehicle, sell it, and keep the proceeds to cover the amount you owe and any associated expenses. To avoid such a situation, consider alternatives to title loans, such as:
- Negotiating a payment plan with the seller or provider of the service or product you need the loan for
- Contacting a credit counseling service for financial advice and assistance
- Borrowing from friends or family
- Seeking financial help from a charity or government agency
- Applying for a Yendo vehicle secured credit card
Regulations and Consumer Protection
In Florida, title loan lenders are regulated under Chapter 537, Florida Statutes, known as the Florida Title Loan Act. Lenders must be licensed by the state Office of Financial Regulation, and borrowers are entitled to certain protections under the law. For example, the lender must provide a written agreement specifying the loan amount, interest rate, and terms of repayment. Additionally, the lender must follow specific procedures for repossession and sale of the vehicle and provide you with an accounting of the amount owed. [2]
In conclusion, title loans in Florida can be a source of quick cash for those in need, but they come with significant risks, including the potential loss of your vehicle. Before taking out a title loan, consider alternative options and ensure you fully understand the terms and conditions of the loan agreement. If you decide to pursue a title loan, make sure the lender is licensed and regulated by the state of Florida to protect your rights as a consumer.
The Yendo Card - The Title Loan Alternative
Yendo is the first credit card that's backed by the value of your car, so you can use your car title to get a credit line of up to $10k.
The card can provide access to credit for those who might not be able to qualify for other credit cards. It's a real credit card, powered by Mastercard, that provides credit limits from $450 - $10,000, depending on the value of your car.
So, rather than re-applying for loans, for example, you can access funds an ongoing basis and, with responsible usage like on-time payments, build your credit too.
Compare Yendo to a title loan
If you're considering a title loan in Florida, Yendo could be a great option for you, especially if you compare the costs as well as the ability to tap into your Yendo credit line on an on-going basis - there's no need to re-apply.
Features & benefits of the card
- Credit limit - access up to $10k in credit
- Only pay for what you spend (plus interest and fees)- it's a credit card, so you only pay for what you spend, plus interest and fees. Or, if you pay off your balance each month, you only pay for what you spend
- App - the Yendo app lets you manage your account, wherever you are
- Virtual card - access a portion of your credit limit prior to getting your physical card in the mail with the Yendo virtual card. Use your virtual card in addition to your physical card
- Cash advances - ability to do cash advances on your card if you need to access money quickly
- Access to revolving credit – you’ll have a revolving line of credit that opens up as you make payments
- Credit reporting – all your account activity will be reported to the credit bureaus, giving you the perfect opportunity to build your credit
Additional information
Citations
[1] Florida Office of the Attorney General - “Understand what you will have to pay” section
[2] Florida Office of the Attorney General - “Get the facts you need” section