In the state of Colorado, new laws intended to limit short term money loans are set 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.
Keeping the interest rates limited
The interest rates of personal debt loans in Colorado will now be limited to 45 percent annual interest. The term of loans are often much less than a full year, but interest rates are calculated annually. 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.
Extending the term of the loans
Currently, the short term loans offered in Colorado can have terms as short as two weeks. When the new legislation goes into effect in August, that term could be extended. Lenders will be legally required to offer a term no shorter than six months on the loans. The lenders are also required to offer the ability to repay the loan in less than six months.
Monthly and origination fees
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 whole payday advance debate
There has been a heavy debate over money now in Colorado. Some legislators want to pass quite possibly stronger regulations on the payday advance industry. The current Colorado bill passed with just one vote. In the end, pay day loans continue to be a controversial issue, and the state legislature is certain to revisit the issue again.
