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Under Colorado law, interest rates for a payday loan may exceed 300 percent if you’re measuring your loan as an annual percentage rate. Though the loans are typically held for just a few weeks, their costs can still add up for consumers who are already pinched, leading to efforts by the state legislature to rein in the industry.
But many Republicans and a few Democrats don’t support the idea. They fret that a proposal to restrict the payday-loan interest rate to an annual 45 percent with no more than a $50 origination fee will essentially shutter the industry in the state.
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“This bill will kill 1,600 jobs in Colorado,” says Representative Steve King, a Grand Junction Republican (via The Denver Post).
Nevertheless, after floundering for weeks, the re-tooled House Bill 1351 has advanced, after some Democratic hold-outs became peeved at a marketing blitz by the industry featuring robotic phone calls that claim legislators’ efforts would end access to credit, reports The Colorado Independent.
Legislators like John Kefalas (pictured), a Fort Collins Democrat, say the payday-loan “industry lost me when they put in robocalls with false information.” He says his constituents have been annoyed by the calls and have in turn called him.
Meanwhile, CBS News, reporting from Los Angeles, highlights how a payday loan worked from the point of view of one consumer who got in over his head and eventually filed for bankruptcy.