New laws intended to limit the short term money loans offered in Colorado are going to go into effect. In August of this year, Colorado payday advance direct lenders will have the interest rates and repayment terms of their products capped. Legislators had called for a stronger bill, but lobbyists had been pushing for a weaker bill.
Lower interest rates
Personal debt loans in Colorado are going to be limited to 45 percent annual interest rates. Though interest rates are calculated annually, the terms of the loan are really much, much shorter. The current loan limits in Colorado are set at 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
Currently, the short term loans offered in Colorado can have terms as short as two weeks. That term could be extended as of August. There will be a minimum term of six months or longer on all these loans. The lenders are also required to offer the ability to repay the loan in less than six months.
Fees for origination and carrying
The newest bill in Colorado allows fees for both carrying the loan and originating the loan. The lender could be able to charge $ 75 to originate the loan.
The debate over pay day loans in Colorado
There has been a heavy debate over quick cash in Colorado. Some individuals say the pay day loans industry should be banned entirely. The current bill, though, passed with a very slim one-vote majority. In the end, payday cash advances continue to be a controversial issue, and also the state legislature is sure to revisit the issue again.
