The Downfall of the Payday Loan in Colorado says PaydayRate
March 2, 2010 – New York, New York — A bill has been passed regarding payday loans which will tremendously impact the payday lending industry in Colorado. This bill is seeking to cap payday loans at 36 percent instead of the regular flat fee that the lending companies are currently charging. Payday loan fees are high especially when they are compared to annual rates. However, the payday loan is a short term loan with small amounts being loaned out. Loans are between $250 and $2500 to be paid back in about a two week window frame. On a $500 loan, you would have to pay an interest rate of $75.
These loans are commonly taken out in cases of financial emergencies. Only people with steady full time jobs are allowed to take out such loans as the loaning companies require one’s employment information and payment stubs to verify that the borrower is currently working and can pay back the loan. According to the Attorney General’s office, the average loan asked for in 2008 was for $369.
Payday loans will reportedly be only allowed one at a time if the bill passes in Colorado. However, Colorado payday borrowers have on average only requested between one and six loans in 2008 (72 percent of borrowers). Only 5.8 percent of the 303,462 loans taken out in 2008 took out more than 13 loans in total, which is a very small percentage nationally. The reason why this legislation is threatening is because it could entirely wipe out payday lending. With an interest rate cap, these small loans will go out of business and basically eliminate the industry in the state of Colorado.
Josh Jackson, Spokesperson for PaydayRate says, “Colorado is currently in a difficult position. In a matter of months we will know what the voters of the nation believe will happen to the payday loan.”
About PaydayRate: PaydayRate is the leading online payday industry watchdogs. At PaydayRate, the payday watchdogs have made learning about Payday Loans fast and easy. Nobody makes it simpler, to understand the pros and cons of emergency payday lending. PaydayRate allows visitors to do their research before deciding on a payday loan. In addition, PaydayRate allows Visitors to share their experiences with companies on its educational forum.
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