In the state of Colorado, new laws intended to limit short term money loans are set to go into effect. New caps can be put on payday advance direct lenders in Colorado. The bill is stronger than some in the industry had hoped for and weaker than many legislators were pushing for.
Lower interest rates
Annual interest rates on personal debt loans in Colorado can be limited to 45 percent annual interest rates. Though interest rates are calculated annually, the terms of the loan are actually much, much shorter. At the moment in Colorado, the loans are capped at 300 percent interest. A few legislators were pushing for a 36 percent cap.
The longer terms required on loans
Short term installment loans in Colorado currently have terms between seven and thirty days. That term can be extended as of August. There will be a minimum term of six months or longer on all these loans. Borrowers will even be required to have the flexibility of repaying the loan earlier than the six month term.
Carrying and originating the loan
The borrowers who offer these loans in Colorado can be allowed to charge fees for originating and carrying the loan. Lenders can be allowed to charge an origination fee of $ 75, and monthly fees of $ 7.50 per $ 100 borrowed, up to $ 30 maximum.
The debate over payday advances in Colorado
In almost each state, the payday loan debate has been heavy. Some people say how the pay day loan industry should be banned entirely. Just one vote made the difference in passing the Colorado bill. Most state legislatures will probably end up reconsidering this controversial issue time and time again.
