Payday Loans In Colorado And The Threat Of HB 1351

Various state legislatures have passed tough payday loans regulation in recent months, and now Colorado HB 1351 has made it through after a narrow vote. Progressive States Network reports that HB 1351 caps APR at 45 percent and requires that lenders give borrowers as long as six months to pay back the money borrowed. Because payday loans are commonly a two-week short term loan, the interest a lender would gain from extending a loan at an annual interest of 45 percent would amount to not much more than the $ 4.14 a lender charging a 36 percent APR would receive. Thirty-six percent is a common cap that many states have placed 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 didn’t want HB 1351?

Those who said HB 1351 is bad for jobs and the economy were Colorado Financial Service Centers Association and the community Financial Service Association (CFSA). In a TV spot, the organizations gave some examples of how recent tax hikes and regulations in Colorado have cost the state some jobs (such as 5,000 Amazon.com jobs that were lost). They claimed that HB 1351 would cost the state 1,600 jobs out of the payday loans industry alone. 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 payday loans industry, if the rhetoric of the Center for Responsible Lending is to be believed. The groups include C3 – Colorado Competitive Council, Society of Hispanic Human Resource Professionals, the Hispanic Contractors of Colorado, and Urban League of Metro Denver, among others.

Wall Street madness caused the financial meltdown

Some organizations with a lot of money are claiming it was the payday loan industry that is to blame because of a consumer’s ability to roll over loans. What most of this criticism is forgetting is the fact that not only do 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, just to name a few, Colorado HB-1351, Oregon’s SB 993, Illinois’ HB 537, Ohio’s HB209, New Hampshire’s SB 193 or Iowa’s HF 2127. Consumers like being able to have the freedom of making their own choice rather than being treated like children without a choice.

Citations

Colorado HB 1351

http://www.leg.state.co.us/CLICS/CLICS2010A/csl.nsf/fsbillcont3/041577DBD253C4C9872576D20063325F?Open&file=1351_ren.pdf