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State ready to slash interest on title loans

The Senate prepares to join the House in reducing interest rates from up to 264 percent annually to 30 percent a year.

By SHELBY OPPEL

© St. Petersburg Times, published April 28, 2000


TALLAHASSEE -- After four years of trying, state lawmakers are poised to severely limit the interest that title loan companies can charge Florida car owners.

The Senate gave preliminary approval Thursday to a measure that would slash interest rates to 30 percent annually. Gov. Jeb Bush has said he will sign the bill, which the House passed unanimously last week.

Holding the car titles as collateral, title loan companies grant quick loans to the owners at interest rates of up to 264 percent per year. If a car owner falls behind on the payments, the company takes the car.

Critics say the companies prey on poor people who have few options, a practice tantamount to legalized loan-sharking.

The bill to rein in interest rates "means victory," said Dorene Barker of Florida Legal Services. "It means finally the people's voices have been heard."

Thirty-six Florida counties have ordinances limiting title loan interest. Pinellas and Citrus counties are among those that don't and would be most affected by the proposed law. Pinellas County commissioners have said they were waiting on the Legislature to act.

"We were committed to enforcing that kind of ordinance if the state didn't do it," said Pinellas County Commission Chairman Bob Stewart.

Hillsborough County passed a 30 percent limit on title loan lenders in May -- after which most lenders closed up shop. Hernando and Pasco counties have weaker ordinances that would be trumped by the statewide measure.

Pinellas officials estimate that about 60 title loan companies operate in the county. David Halprin, president of Low Cost Auto Inc. near Pinellas Park, predicts the new law will put him and most lenders out of business.

The lenders say they can't survive under the new limits, primarily because they cater to high-risk customers whom most banks won't touch. Without title loans, those customers will have even fewer options for borrowing cash, Halprin said.

"This is pandering at its worst. There is no consumer issue," said Halprin, who owns a second store in New Port Richey.

"(Customers) know exactly what they're doing," said Halprin. "They kiss us, almost, when we make them a loan because no one else will do it."

Led by state Rep. Bill Sublette, R-Orlando, the House has passed limits on the title loan industry for the past two years. But the proposal stalled in the Senate, mainly due to objections from Senate dean W.D. Childers, R-Pensacola.

This session, Senate President Toni Jennings and Majority Leader Jack Latvala, R-Palm Harbor, made the limits a top priority. When the bill came up for a vote Thursday, Childers didn't say a word.

Before Thursday, the Senate's title loan proposal was tied to similar limits aimed at check-cashing stores that grant so-called "pay-day loans." Unable to rally support for restricting both industries, Latvala removed pay-day lenders to ensure title loan limits would survive.

Pay-day lenders accept personal checks from customers with no money in their bank accounts, and give them cash in return. The stores hold the checks for up to two weeks, in exchange for various fees that equate to high annual interest rates.

Separate proposals to restrict pay-day lenders are still alive in the House and Senate, though significant differences remain.

In Pinellas, county commissioners may adopt their own limits on pay-day lenders if the Legislature does not, said Stewart, the commission chairman.

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