A coalition of community, faith, civil rights and advocacy organizations have come together to stop predatory payday loans through a ballot initiative in the 2018 election.
Payday lenders are currently the only lenders exempted from state usury laws, which means they can charge more than 200 percent in annual interest for loans of up to $500. Payday lenders require borrowers to give them direct access to their bank account to collect payment. Payday loans force struggling families into cycles of debt with these extremely high interest rates on loans that make repayment very difficult.
Coloradans to Stop Predatory Payday Loans will ask voters to require that payday lenders play by the same rules as other lenders in Colorado by charging no more than 36% APR. It’s time to close the payday loan loophole!
The ballot language is simple: Shall there be an amendment to the Colorado Revised Statutes concerning limitations on payday lenders, and, in connection therewith, reducing allowable charges on payday loans to an annual percentage rate of no more than thirty-six percent?
Fifteen states and the District of Columbia already stop predatory payday lending within their borders by enforcing interest rates caps of 36 percent or less. Studies have shown that access to credit doesn’t change in states that cap interest rates.
After North Carolina closed payday lending completely, studies found that there was no significant impact on the availability of credit for households. Former payday borrowers there and in other payday-free states report that they now build on savings and cut back on expenses, as well as access other resources that are much cheaper and less harmful than payday loans.
Colorado will now join four other states that put this initiative on their ballot, including Arizona, Ohio, Montana and South Dakota, where interest rate caps passed overwhelmingly.
This year, the voters of Colorado have the chance to level the playing field!