New laws intended to limit the short term cash loans offered in Colorado are going to go into effect. Colorado payday loan direct lenders are going to have both interest and repayment terms capped. The bill is is a compromise, weaker than some legislators had hoped for but stronger than industry lobbyists had pulled for.
Keeping interest rates in check
Personal debt loans in Colorado are going to be limited to 45 percent annual interest rates, though annual interest doesn’t actually exist in the world of short-term lending. Payday loans usually have a term of a couple of weeks or a couple of months, not a full year. Still, Colorado is choosing to focus its law on an annual interest rate. Currently in Colorado, the loans are capped at 300 percent interest. A few legislators were pushing for a 36 percent cap.
Extending repayment terms
The term on short term loans in Colorado is usually set at two weeks or less. That term will be extended as of August. The minimum term a lender can offer will be six months. Borrowers will also need to be offered the ability to repay the loan early.
Fees for origination and carrying
The newest bill in Colorado allows fees for both carrying the loan and originating the loan. The lender will be able to charge $ 75 to originate the loan. Lenders also can charge monthly fees of up to $7.50 per $100 borrowed, but there is a to $30-per-month maximum.
Debating Colorado’s payday loans
There has been a heavy debate over pay day loans in Colorado. Some legislators are calling for payday loan industry businesses to be banned completely. The current Colorado bill passed with just one vote. No matter what, payday loans will continue to be a controversial issue for most state legislators for years to come.
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