New laws intended to limit the short term money loans offered in Colorado are going to go into effect. New caps could be put on cash advance direct lenders in Colorado. Legislators had called for a stronger bill, but lobbyists had been pushing for a weaker bill.
Limiting interest rates
The interest rates of personal debt loans in Colorado will now be limited to 45 percent annual interest. Though interest rates are calculated annually, the terms of the loan are actually much, much shorter. Presently in Colorado, the loans are capped at 300 percent interest. Some lenders said that a 36 percent rate cap was good, but lenders argued that high administration costs and default rates make that rate practically impossible to operate under.
Extending repayment terms
The term on short term installment loans in Colorado is generally set at two weeks or less. 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 also be required to have the flexibility of repaying the loan earlier than the six month term.
Fees for carrying and originating the loan
The newest bill in Colorado allows fees for both carrying the loan and originating 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 payday loan debate in Colorado
In almost every state, the pay day loans debate has been heavy. Some legislators want to pass perhaps stronger regulations on the cash advance industry. Just one vote made the main difference in passing the Colorado bill. In the end, payday loans continue to be a controversial issue, and also the state legislature is sure to revisit the issue again.
