Various state legislatures have passed tough payday loans regulations, and now Colorado HB 1351 has made it after a narrow vote. HB 1351 caps APR at 45 percent and requires that lenders give borrowers as long as six months to pay back the money borrowed as outlined by Progressive States Network. The interest a lender would gain from extending a loan at an annual interest of 45 percent would amount to not much a lot more than the $ 4.14 a lender charging a 36 percent APR would receive because payday loans are commonly a two-week short term loan. Thirty-six percent is a common cap that many states have on payday lending, and it isn’t feasible for payday lenders. The only way Colorado lenders could cover their own costs would be the leeway to charge a $ 75 origination fee and monthly fees of up to $ 30 in excess of interest, according to Progressive States.
Who cried no on HB 1351?
Colorado Financial Service Centers Association and the Community Financial Service Association (CFSA) said HB 1351 is bad for jobs and also the economy. In a TV spot, the organizations cited examples of how recent tax hikes and regulations in Colorado have cost the state jobs (such as 5,000 Amazon.com jobs which were lost). Out of the payday loans industry alone, they claimed HB 1351 would cause the state to lose 1,600 jobs. Not only that, but the legislation that the Boulder Daily Camera called “a terrible bill” in February is supported by groups that would appear to be the “targets” of the payroll loans industry, if the rhetoric of the Center for Responsible Lending is to be believed. The groups contain C3 – Colorado Competitive Council, Society of Hispanic Human Resource Professionals, the Hispanic Contractors of Colorado, and Urban League of Metro Denver, among others.
Financial Meltdown was caused by Wall Street madness
Sadly, some organizations say that payroll loans are to blame because of a consumers ability to roll over loans. What the vast majority of all of this criticism forgets is the fact not only do one of the most visible payday loans companies nationwide either prohibit or severely limit rollovers, the CFSA makes a point of working with the vast majority of lenders who do put consumer protections of this sort in place. Consumers don’t need Colorado HB-1351, Oregon’s SB 993, Illinois’ HB 537, Ohio’s HB209, New Hampshire’s SB 193 or Iowa’s HF 2127, to name a few. Consumers like being able to have the freedom of making their own choice rather than being treated like children without a choice.
Sources
Colorado HB 1351
http://www.leg.state.co.us/CLICS/CLICS2010A/csl.nsf/fsbillcont3/041577DBD253C4C9872576D20063325F?Open&file=1351_ren.pdf
