A return of 264 percent loans to the desperate?

A 30 percent annual cap imposed in 2000 just isn't enough, title lenders plead. A House panel narrowly agrees.

Published April 18, 2006

TALLAHASSEE - Six years ago, Gov. Jeb Bush signed a law sharply reducing the interest rates car title loan companies in Florida could charge customers.

Title loans are short-term debts in which people put up cars as collateral for cash. Some of those customers are people with credit problems who have no other way to borrow money. If they don't repay the loan with interest, the lender can repossess the car.

What had been a 264 percent annual loan rate - 22 percent a month - was capped at 30 percent a year in 2000. But title lenders say that rate is too low. They are lobbying the Legislature to return to the days of 264 percent interest.

Rep. Chris Smith of Fort Lauderdale, the House Democratic leader, is pushing the higher interest rates. He narrowly prevailed in a House committee vote Monday after making several changes that mollified some critics, including a $3,000 cap on a loan and credit counseling, at the lender's expense, after the 30-day loans are extended for five additional months.

But Smith's hometown police department remains opposed to his bill. A detective said high-interest title loans trap borrowers in a vicious cycle that can never be broken.

"These people are getting a loan as a last resort, and we're punishing them," Fort Lauderdale police Detective Jack Gee told the committee.

Lynn Drysdale of Jacksonville Area Legal Aid criticized the bill and said her clients are working poor and elderly people who would dig themselves deeper in debt by turning to title loans.

Osjha Anderson of Select Management Resources of Alpharetta, Ga., a title loan company, called the 2000 law much needed, because title lending was unregulated.

"You passed a great bill except for the interest rates were capped so low that there's not one title lender licensed in the state of Florida right now," Anderson told lawmakers. "And there are people in Florida that need these products." She said Florida has "embraced" the short-term lending industry by encouraging pawn shops and payday lenders, and should do the same for title lenders.

Smith's bill (HB 1109) passed on a 5-4 vote. The panel's chairwoman, Rep. Kim Berfield, R-Clearwater, voting last, broke a 4-4 die and cast the deciding vote. Berfield said Smith was receptive to suggested changes to help consumers, and she called Monday's amendments a step in the right direction.

The other local legislator on the committee, Rep. John Legg, R-New Port Richey, voted against the bill Monday.

A similar Senate version of the bill, sponsored by Sen. Carey Baker, R-Eustis, has not yet been heard.

--Steve Bousquet is at bousquet@sptimes.com or 850 224-7263.