Giving people the opportunity to borrow a little money between paychecks is fine. But it’s hard to find much sympathy for businesses up in arms about a bill that would allow them to charge annualized interest of only 45 percent on such loans.
Currently, they’re able to charge interest rates that amount to 400 percent or 500 percent a year on the short-term loans. That’s outrageous.
Some people argue payday loan outlets are simply supplying a product to meet a demand, and people borrow voluntarily. That’s true, but we doubt many of them truly understand how costly their loans are — as high as 20 percent interest over two weeks for a $300 loan. Credit card companies, which are regularly criticized for their high interest rates, don’t begin to reach those levels.
Furthermore, people in most other states have managed to survive with annual interest rates on payday loans limited to 45 percent. We suspect they’ll do so in Colorado, too.
The Legislature should pass House Bill 1351 and put a cap on payday usury.