A Florida loan agreement is a written contract between a lender and a borrower that sets the loan amount, the repayment terms, the interest rate, and the consequences of default, drafted to comply with Florida’s usury caps, disclosure rules, and Statute of Frauds. Get those pieces right at signing and the agreement will hold up; get them wrong and a court can strip the interest, void the contract, or expose the lender to penalties worth more than the loan itself.
What the Agreement Must Contain
Start with the basics. The agreement needs the full legal name and address of both the lender and the borrower, the exact principal amount in dollars, and a clear description of how repayment will happen: monthly, biweekly, or lump sum, by what method, and over how many payments. Florida courts expect precision. A vague loan amount or an open-ended repayment schedule invites a challenge to the entire contract.
Late fees belong in the written terms if you plan to charge them. For loans made by licensed consumer-finance lenders, Florida caps delinquency charges at $15 per late monthly payment and $7.50 per late biweekly or semimonthly payment, and the borrower must agree to the charge in writing before it can be imposed.1Florida Senate. Florida Code 516.031 – Finance Charge; Maximum Rates Private loans outside the Consumer Finance Act have no statutory cap on late fees, but a court can strike a fee it considers unconscionable.
Include a prepayment clause even when early payoff seems unlikely. If the agreement is silent, the parties can end up fighting over whether the borrower owes a penalty for paying ahead. Federal Regulation Z restricts prepayment penalties on certain consumer mortgage loans, so mortgage lenders need to confirm the clause complies with federal law as well.
Promissory Notes
A promissory note is a standalone written promise by the borrower to repay the loan. It can accompany the loan agreement or serve as the primary document for simpler transactions. To hold up in court and qualify under Florida’s documentary stamp tax framework, the note needs three elements: an unconditional promise to pay, a sum certain in money, and the borrower’s signature.2Florida Department of Revenue. Florida Documentary Stamp Tax on Promissory Notes A specific repayment schedule is not legally required on a note, though including one is still sound practice.
When Florida Requires a Written Agreement
Florida’s Statute of Frauds requires certain agreements to be in writing and signed by the party being held to them. For a loan, the trigger is the repayment period. If repayment will run longer than one year, the agreement must be in writing to be enforceable.3Florida Senate. Florida Statutes 725.01 – Promise to Pay Another’s Debt, Etc. There is no dollar threshold. A $200 loan payable over 18 months technically needs a written agreement; a $50,000 loan due in six months could in theory be oral, though no lender should rely on that. Oral loan disputes collapse into competing recollections, and Florida courts strongly prefer documentary evidence.
Interest Rate Limits
Florida’s usury statutes work in layers that depend on loan size and the lender’s intent.
Civil Usury: 18 Percent
For loans of $500,000 or less, interest above 18% per year is usurious under Florida Statutes 687.02 and 687.03.4Florida Senate. Florida Statutes Chapter 687 – Interest and Usury; Lending Practices A lender who willfully charges above the cap forfeits all interest on the loan. If the borrower already paid the usurious interest, the lender owes back double that amount.5The Florida Legislature. Florida Code 687.04 – Penalty for Usury Loans above $500,000 are exempt from the 18% civil cap, but they still face the criminal thresholds below.
Criminal Usury: 25 Percent and Above
Regardless of loan size, interest above 25% per year is criminal. Between 25% and 45% it is a second-degree misdemeanor; above 45% it is a third-degree felony.6The Florida Legislature. Florida Code 687.071 – Criminal Usury, Loan Sharking A loan that violates the criminal usury statute is entirely unenforceable. So for loans over $500,000, the effective ceiling is 25%: the civil cap no longer applies, but the criminal cap does.
The Effective Rate Test
Florida courts measure the total cost of the loan, not just the stated rate. Mandatory origination fees, processing charges, and service costs get rolled in and annualized. A loan with a stated 16% rate can end up usurious once the fees are included, even though the headline number looked compliant.
Usury Savings Clauses
Many agreements include a usury savings clause stating that any charge found to exceed the legal limit automatically reduces to the maximum permitted rate. The Florida Supreme Court held in Jersey Palm-Gross Inc. v. Paper that such clauses can be evidence of the lender’s intent not to charge usurious rates, particularly when the effective rate cannot be determined from the face of the agreement. Including one is good practice. It is not a shield when the loan’s actual terms plainly exceed the statutory ceiling.
Consumer Finance Act Lenders
Chapter 516 governs a specific category of lender. Anyone making loans of $25,000 or less at interest rates above 18% must hold a Florida consumer-finance license. Lending at those rates without a license is illegal regardless of what the borrower agrees to.
Licensed lenders may charge above the 18% cap, but the rates are tiered: 36% per year on the first $10,000 of principal, 30% on the portion between $10,000 and $20,000, and 24% on the portion between $20,000 and $25,000.7The Florida Legislature. Florida Code 516.031 – Finance Charge; Maximum Rates Licensed lenders must also deliver specific disclosures at the time of the loan: the amount and date, the maturity date, the nature of any security, both parties’ names and addresses, and the interest rate.8Florida Senate. Florida Code 516.15 – Duties of Licensee Disclosures must be in English and in clear terms.
Collateral and Secured Loans
If the loan is backed by collateral, describe the pledged property in enough detail that a third party could identify it. Florida follows Article 9 of the UCC for secured transactions in personal property. Under 679.1081, a collateral description is sufficient if it “reasonably identifies what is described,” by specific listing, category, quantity, or any method that makes the collateral objectively determinable.9Florida Senate. Florida Code 679.1081 – Sufficiency of Description A description like “all assets of the borrower” is too vague to rely on. Identify the specific vehicle, equipment, inventory, or receivables.
Perfecting the Security Interest
Describing the collateral creates the security interest. It does not give the lender priority over other creditors. For that, the lender must perfect by filing a UCC-1 financing statement with the Florida Secured Transaction Registry.10Florida Secured Transaction Registry. Florida Secured Transaction Registry The filing requires the debtor’s legal name, the secured party’s name, and a description of the collateral. Skipping this step is one of the costlier mistakes in secured lending. Without perfection, the lender’s claim falls behind later creditors who did file, and in bankruptcy the claim may be wiped out entirely.
Real estate collateral follows a different track. The lender records a mortgage or lien with the county clerk’s office in the county where the property sits, and the recording triggers Florida’s documentary stamp tax.
Default, Acceleration, and Enforcement
Define default precisely. Missed payments are the obvious trigger, but lenders often add others: a bankruptcy filing, a material misrepresentation on the application, or a breach of a covenant such as maintaining insurance on collateral. Vague default provisions invite litigation over whether a default even occurred.
An acceleration clause lets the lender demand immediate repayment of the full remaining balance after default. Florida courts enforce these clauses when they are clearly stated and applied reasonably. A lender who accelerates over a trivial or disputed default can face an unconscionability challenge.
For secured loans on personal property, Florida law allows the lender to repossess the collateral after default without going to court, as long as the repossession happens without breaching the peace.11Florida Senate. Florida Code 679.609 – Secured Party’s Right to Take Possession After Default Breach of the peace means no threats, no force, no confrontation. If the borrower objects or the situation escalates, the lender must stop and use the courts instead.
Real property requires judicial foreclosure: a lawsuit, a court order, and a public auction. If the sale falls short of the balance owed, the lender can seek a deficiency judgment for the shortfall, at the court’s discretion.12Florida Senate. Florida Code 702.06 – Deficiency Decree; Common-law Suit to Recover Deficiency
Attorney’s Fees Clauses Cut Both Ways
Many loan agreements let the lender recover attorney’s fees if collection ends up in court. In Florida, that one-sided clause triggers a reciprocal right. Under 57.105(7), if an agreement entitles one party to attorney’s fees for enforcement, the court may award reasonable fees to the other party when that party prevails.13Florida Senate. Florida Code 57.105 – Attorney’s Fee; Sanctions for Raising Unsupported Claims or Defenses The word “may” matters: it is discretionary, not automatic. In practice, a lender who writes a one-sided fees clause should expect the borrower to invoke the statute if the case falls apart.
Electronic Signatures
Florida’s Uniform Electronic Transaction Act, codified at 668.50, gives electronic signatures the same legal weight as handwritten ones, provided both parties agree to transact electronically.14Florida Senate. Florida Code 668.50 – Uniform Electronic Transaction Act The signer must show clear intent to sign, and the signature must be linked to the specific document in a verifiable way. Digital signing platforms satisfy this through certificates, timestamps, and audit trails. Promissory notes secured by real estate may still require notarization or additional formalities for recording. If a signature is later disputed, the audit trail becomes the key evidence.
Documentary Stamp Tax
Florida taxes promissory notes and other written obligations to pay money. The rate is $0.35 for every $100 (or fraction of $100) of the debt, capped at $2,450 per note.15Florida Senate. Florida Code 201.08 – Tax on Promissory or Nonnegotiable Notes, Written Obligations, and Mortgages On a $100,000 note, the tax is $350. When a mortgage secures the loan, the tax is paid on the mortgage at recording rather than on the note, at the same rate. The tax applies when the document is executed, delivered, or recorded in Florida, and again on each renewal. Failing to pay the stamp tax on a mortgage does not void the lien, but the mortgage cannot be enforced in court until the tax is paid.
Imputed Interest on Private Loans
Loans between family members or business associates carry a tax wrinkle. If the agreement charges interest below the IRS Applicable Federal Rate, the IRS treats the loan as if it carried the AFR anyway, and the “missing” interest is imputed to the lender as taxable income under Internal Revenue Code Section 7872.
For January 2026, the short-term AFR (loans of three years or less) is 3.63%, the mid-term AFR (three to nine years) is 3.81%, and the long-term AFR (over nine years) is 4.63%.16Internal Revenue Service. Revenue Ruling 2026-2 These rates update monthly. A 1% rate on a five-year loan means the IRS imputes the gap between 1% and the mid-term AFR to the lender. A zero-interest loan imputes the full AFR amount. The cleanest fix is to set the loan’s rate at or above the AFR in effect when the loan closes.
Active-Duty Borrowers and the SCRA
Federal law caps interest on debts a servicemember took on before military service. Under the Servicemembers Civil Relief Act, those pre-service debts cannot carry interest above 6% per year during active service, and for mortgage obligations the cap extends one year past the end of service.17Office of the Law Revision Counsel. 50 USC 3937 – Maximum Rate of Interest on Debts Incurred Before Military Service
“Interest” under the SCRA is broad and includes service charges, renewal charges, and fees. On a valid request, the creditor must forgive interest above 6%, reduce the monthly payment, and refund any excess already collected. The servicemember triggers the cap by sending written notice with a copy of military orders no later than 180 days after leaving active duty. Knowingly violating the cap is a federal offense carrying fines and up to one year in prison.17Office of the Law Revision Counsel. 50 USC 3937 – Maximum Rate of Interest on Debts Incurred Before Military Service One trap: if a servicemember refinances or consolidates a pre-service debt while on active duty, the new obligation may fall outside the cap because it was created during service rather than before it.
Statute of Limitations
Wait too long to sue and the right disappears. In Florida, the limitations period for an action on a written contract is five years.18Florida Senate. Florida Code 95.11 – Limitations on Actions Other Than for Recovery of Real Property The clock starts at the first breach, not at signing. For installment loans, each missed payment can start its own five-year window for that payment, which sometimes catches borrowers off guard years after they assumed the debt was stale. Foreclosure actions carry the same five-year period under the statute.