In the state of Colorado, new laws intended to limit short term money loans are set to go into effect. New caps could be put on cash advance direct lenders in Colorado. The bill is stronger than some within the industry had hoped for and weaker than numerous legislators were pushing for.
Keeping the interest rates limited
Personal debt loans in Colorado are going to be limited to 45 percent annual interest rates. Like most cash today advance loan products, the term of the loan is much shorter than a year, but interest rates are often calculated on an annual basis. The current cap on these loans in Colorado is 300 percent annual interest. Legislators were pushing for a 30 percent cap, though lenders pointed out that high administration costs and default rates made offering loans at that rate very difficult.
The longer terms required on loans
The term on short term installment loans in Colorado is generally set at two weeks or less. When the new legislation goes into effect in August, that term can be extended. There could be a minimum term of six months or longer on all these loans. Borrowers may also have to be offered the ability to repay the loan early.
Fees for carrying and originating the loan
The borrowers who offer these loans in Colorado will be allowed to charge fees for originating and carrying the loan. Borrowers could be charged $ 75 to originate the loan and up to $ 30 each month to carry the loan.
The debate over payday advances in Colorado
On the Senate floor and in the Governor’s office, the debate over easy cash loans has been heavy. Some people say the paydayloans industry should be banned entirely. Just one vote made the main difference in passing the Colorado bill. In the end, payday cash advances continue to be a controversial issue, and the state legislature is certain to revisit the issue again.
