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House passes bill restricting payday loans

Rocky Mountain News

Published February 26, 2008 at 12:05 a.m.

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The Colorado House of Representatives passed a payday lending reform bill Monday.

House Bill 1310 now moves to the Senate.

The bill's highlights:

* Changes the allowable finance charges for an initial deferred deposit loan in a 12-month period to $10 for each $100 loaned, up to a maximum charge of $30.

* Limits the allowable rate of interest to 36% per annum.

* Prohibits a lender from making a deferred deposit loan to a consumer who has an outstanding loan with the lender or any other lender.

* Requires a lender to verify that a consumer does not have an outstanding loan prior to initiating a new loan by accessing a common database.

The bill is sponsored by Rep, Mark Ferrandino, D-Denver, and Senate President Peter Groff, D-Denver.

"We applaud the Legislature for taking decisive action to protect hardworking Coloradans from predatory payday loans," said Spiros Protopsaltis, president of the Center for Policy Entrepreneurship, said in a statement. "House Bill 1310 provides reasonable reform for the payday lending industry and closes a loophole that traps borrowers into an unanticipated and costly cycle of long-term debt they cannot easily escape."

Comments

  • February 29, 2008

    9:35 p.m.

    Suggest removal

    Grant writes:

    This is so dumb. If we keep restricting the payday lenders, they are not going to be able to continue to do business and we are going to be out another option. What happens if the payday lenders leave the state? Loan Sharking becomes popular again. Then, instead of people just being in debt, they also have broken legs. Also, they are bouncing checks and getting overdraft fees. These are more expensive than payday loans, and we are worse off than we were with the payday loans. Why don't you people stop pointing fingers and start thinking of alternatives? Don't ban payday loans, start your own companies and put them out of business. Oh, you can't? Why not? Because there is no other option, that's why. So leave it alone and focus on the problem, the borrowers. If we educate the borrowers who are having a problem, we can keep payday loans for those of us who use them responsibly.

  • March 6, 2008

    10:19 a.m.

    Suggest removal

    rkzmgmt writes:

    A 36% APR is by no means a reasonable fee for the payday loan industry when the risks are taken into consideration. The statement that a payday loan “traps borrowers into an unanticipated and costly cycle of long-term debt” has to be a statement from someone who has done very little to educate themselves on payday loans and the industry. It is impossible to have financial ruin or be “trapped” into debt from a $100 or $200 payday loan. People have difficultly keeping up with their finances for other reasons including unexpected circumstances prior to having taken out a payday loan.