Can a car loan place charge higher than the state's legal interest rate?

I have a car loan through CNAC with an interest rate at approx 22%, Florida's legal cap on interest rate is 12%. Do I have any legal recourse or anything I can do to have my rate reduced to the legal cap and have the additional money applied to the balance?

Jacksonville, FL -

Attorney Answers (1)

Deborah Gwen Roher

Deborah Gwen Roher

Debt / Lending Agreements Lawyer - Fall River, MA
Answered

I'm not sure where you get the 12%. States typically have a variety of interest rate caps depending on the nature of the lender and the size of the transaction. Florida's limits on finance charges in the installment sales of cars are found at Fla. Stat. 520.08, which provides in part:

" (1) Notwithstanding the provisions of any other law, the finance charge, exclusive of insurance, shall not exceed the following rates:

(a) Class 1. Any new motor vehicle designated by the manufacturer by a year model not earlier than the year in which the sale is made—$10 per $100 per year.

(b) Class 2. Any new motor vehicle not in Class 1 and any used motor vehicle designated by the manufacturer by a year model of the same or not more than 2 years prior to the year in which the sale is made—$11 per $100 per year.

(c) Class 3. Any used motor vehicle not in Class 2 and designated by the manufacturer by a year model not more than 4 years prior to the year in which the sale is made—$15 per $100 per year.

(d) Class 4. Any used motor vehicle not in Class 2 or Class 3 and designated by the manufacturer by a year model more than 4 years prior to the year in which the sale is made—$17 per $100 per year.

(2) Such finance charge shall be computed on the amount financed as determined under s. 520.07(2) on contracts payable in successive monthly payments substantially equal in amount. "

Here is where it gets even more complicated. An interest rate expressed as a percentage of the total amount financed, like the statute above, is not the same as the Annual Percentage Rate disclosed to you under the Truth in Lending Act. For reasons too complicated to get into here, the APR will almost be higher than the legal "interest rate." The APR is considered to be the most honest and transparent way of expressing the cost of credit and allowing you to comparison shop. I do not know whether a 22% APR exceeds the add-on interest rate that governs your transaction. You may want to consult a Florida member of the National Association of Consumer Advocates (naca.net) who handles vehicle transactions.

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