Payday loan bill wins House approval
DENVER — Payday lenders would be able to keep more of the money they charge for short-term loans under a bill that won approval Thursday in the Colorado House.
Democrats opposed to the measure said it reverses sweeping changes approved last year to limit the interests rates that payday lenders can charge. Some lender’s rates were as high as 500 percent.
Republicans, however, said it doesn’t go nearly that far. The bill, which heads to the Senate, allows payday lenders to keep all of a 20 percent origination fee regardless of when a borrower pays back a loan.
Under last year’s reforms, which extended payday loans from two weeks to six months, a prorated part of the fee had to be refunded if the loan was paid before the end of its term. The changes also allowed lenders to charge a 7.5 percent monthly maintenance fee and an annual interest rate not to exceed 45 percent.
This year’s bill does not alter those charges. As a result, a $500 loan paid off in six months would cost borrowers $337.50.
Rep. Larry Liston, R-Colorado Springs, said he introduced the bill because last year’s changes were too harsh, resulting in some payday shops closing.
But Democrats said the payday industry had been closing stores long before the reforms were approved. They said some have been barred from operating in the state in recent years because of questionable business practices.
In January, Attorney General John Suthers, a Republican, reached a final settlement with a Texas-based lender that resulted in the company having to refund $33,000 in finance charges to 1,675 customers. It also had to pay about $125,000 in consumer restitution because of “the company’s repeated failure to comply with state-ordered corrective actions since 2009,” Suthers’ office said.
The company lost its license to operate for five years.
Regardless, the House approved the measure on a 36–27 vote.