Payday loans have a bad reputation for a good reason – they target people who are already struggling with debt, enticing them with “easy” but very expensive access to a chunk of money quickly. This is why payday loans are often called predatory loans – and why Colorado legislators have put some laws in place to regulate payday lenders and better protect consumers.
Delving deeper into this topic, below, we have answered some commonly asked questions about Colorado laws pertaining to payday loans.
What Consumers Should Know about Colorado Payday Loan Laws
Q – What are the maximum loan amounts and terms per CO payday loan laws?
A – Colorado laws stipulate that the maximum amount that can be borrowed via payday loans is $500. This $500 limit can be met via one or multiple payday loans.
Although there are no maximum terms for payday loans in Colorado, the minimum term of these loans is set at 6 month.
Q – How much can payday lenders legally charge borrowers?
A – It depends on how much is borrowed. For amounts up to $300, Colorado laws allow lenders to charge up to 20 percent of the loan amount in finance fees. For every $100 above the first $300 borrowed, lenders can charge up to $7.50 on top of the standard finance fee.
If a borrower renews a payday loan, the law allows lenders to charge a 45 percent interest rate for renewals.
Q – Does the law allow for payday loan repayment plans?
A – Yes, repayment plans are permitted by law, though the terms of these plans can vary across lenders (so long as the terms are also legal).
Q – Are there collection restrictions for Colorado payday lenders?
A – Yes, Colorado payday loan laws do set some restrictions on how lenders can collect outstanding debts. Specifically, the laws stipulate that:
- Lenders can charge, at most, $25 for “insufficient funds” penalties.
- For unpaid payday loans, lenders can sue borrowers for the full amount of the loan, plus any attorneys’ fees (as acquired to recoup the lent funds).
- Lenders are NOT allowed to sue borrowers unless borrowers have closed their checking accounts prior to fully repaying the loan/debt.
- When borrowers fully repay payday loans before the term of the loan is up, lenders are required to issue refunds for the prorated amount of the APR (annual percentage rate).
Q – What can I do if I’m dealing with a lender who has violated Colorado payday loan laws?
A – Contact the Colorado Attorney General to file a formal complaint and get an official investigation initiated.
While reporting unscrupulous lenders can help borrowers protect their rights, it may not necessarily help them resolve their debt situation, however. For those who are struggling with substantial debt and need advice regarding their best option for relief, contact a seasoned Denver bankruptcy attorney at Garcia & Gonzales, PC today.
Contact a Denver Bankruptcy Attorney at Garcia & Gonzales, P.C.
An experienced Denver bankruptcy attorney at Garcia & Gonzales, P.C. is here for you, ready to help you obtain debt relief and the financial fresh start you deserve.
To learn more about your best debt relief options, as well as how we can help you, contact us today by calling (303) 839-8888 or by emailing us using the contact form at the top of this page.
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