Florida Gov. Ron DeSantis has vetoed a bill that would have doubled the maximum interest rate that nonbank lenders can charge on large consumer loans in the Sunshine State.
The measure would have allowed nonbank lenders to charge 36% on personal installment loans between $4,000 and $25,000. Under current law, the ceiling for those loans is 18%.
"The increase in rates may result in additional consumer indebtedness and could exacerbate the pinch already being felt due to federal government-induced inflation," DeSantis wrote in a veto letter.
The Center for Responsible Lending and various other nonprofit groups had urged DeSantis, who is running for the Republican presidential nomination in 2024, to veto the bill.
"We do not doubt that lenders will flock to Florida if you sign this bill into law since there are few states that allow lenders to charge borrowers 36% interest for loans up to $25,000," the groups said in the letter. "This is for good reason — it is a predatory rate to charge consumers and is morally reprehensible to do so."
Under current Florida law, the rates that nonbank lenders can charge on installment loans are tiered. The maximum annual rate for balances of up to $3,000 is 30%, and the ceiling for balances of between $3,000 and $4,000 is 24%. The bill that DeSantis vetoed would have replaced the tiered rate structure with a blanket 36% cap.
During a March hearing, state Rep. Juan Fernandez-Barquin, the bill's Republican sponsor, argued that the measure would ensure access to credit for borrowers who would otherwise have to resort to high-cost, unsafe online-loan options.
That argument drew pushback from Karen Woodhall, executive director of the Florida Center for Fiscal and Economic Policy. "I'm struggling to understand how getting rid of the tier structure and raising everybody to 36% helps expand access," Woodhall said at the hearing.
In an interview Wednesday, Yasmin Farahi, deputy director of state policy at the Center of Responsible Lending, described the legislation as a giveaway to high-cost lenders.
"These businesses did not need this additional handout to be able to operate," she said. "There's plenty of access to credit, and this would have just increased the cost of already costly loans."
Florida is the latest state where Republican politicians have sided with consumer advocates in their battles with high-cost lenders. In 2018, Ohio lawmakers voted on a bipartisan basis to
"We find that across the political spectrum when we do polling and other research work on this, that these can be bipartisan issues," Farahi said.
