Colorado Payday Loan Initiative: How Campaigners Plan to Stop 200% Lending

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An organization called Coloradans to Stop Predatory Payday Loans submitted nearly double the number of signatures required to secure a payday loan initiative in the November ballot. If approved, the measure would impose a 36 percent cap on loans that can sometimes charge interest of up to 200 percent.

“We look forward to giving Colorado voters a chance to turn things around,” said Corrine Fowler, campaign manager and promoter of the initiative. “We want to end predatory lending in our state and make sure all lenders follow the same rules.”

As of this writing, the Colorado Secretary of State’s office has not formally endorsed the initiative. However, Fowler reveals that his group submitted 188,045 signatures. Given that the number of valid signatures required is just over 98,000, Fowler concedes, “We feel really confident.”

The current text of the document is accessible below in its entirety. But its introduction reads as follows:

Residents Of This State See And Report Payday Lenders Charge Up To 200% Per Year For Payday Loans And Excessive Charges On These Loans Can Lead Colorado Families Into A Debt Trap Of Repeated Borrowing . It is the intention of the people to lower the maximum finance charges allowed for payday loans to an annual percentage rate of 36 percent.

There are currently many payday loan stores in Colorado. Indeed, supporters of the initiative staged a rally outside an ACE Cash Express branch in the metro area earlier this month to announce the number of signatures collected. Speakers included Reverend Anne Rice-Jones of the Rose of Sharon Tabernacle in Lakewood and the Greater Metro Denver Ministerial Alliance – and Fowler points out that “we have strong support from members of the religious community.”

Another angle on the supporters of the payday loan initiative.

Another angle on the supporters of the payday loan initiative.

Courtesy of Stratégies 360

Fowler pinpoints the reason for the availability of such loans in Colorado on “The Deferred Deposit Loan Act.” It was passed by the legislature in 2000 and created an exemption for payday lenders to charge exorbitant interest rates and operate outside of the state’s usury law for loans. less than $ 500. She adds that similar bills were passed “in many states at this time. But since the late 1990s and early 2000s, fifteen states have taken steps to cap the interest rate at 36% or less, and four states – Arizona, Ohio, Montana and The Dakota South – took action on the ballot. So we are following the lead of these other states – because we believe the Coloradians can do better. “

The payday loan initiatives that preceded Colorado’s were hugely popular, she says. “They’ve gone through these four states with overwhelming support, and it’s very bipartisan. They’re all red states, conservative-leaning states, but it’s been passed in all of them because it’s irrational to allow a lender to charge three digits. interest. “

The victims of these loans are mostly “working families,” says Fowler. “To get a loan, you have to have a job. You need to prove that you have a source of income and a bank account, as you need to provide the lender with access to it so that they can withdraw funds from it directly – which is something that most people don’t realize. These are people who are struggling to make ends meet in an economy that is truly unbalanced. Because we have unaffordable and low or stagnant wages, a lot of people can’t make it to the end of the month, so they take out a payday loan. But the average payday loan is $ 392, and people pay up to $ 129 in interest. They will therefore take out a new loan to repay the old one, but they are barely able to keep up with the interest and are never able to repay the principal. This is why it is called the debt cycle. “

The main arguments against such legislation come from the lenders themselves, argues Fowler. “They claim they are going to close their doors. But in other states, we have found that while some of them have closed their doors, many others have adjusted their models. In North Carolina, a state that did it In the early 2000s, ACE Cash Express is still operating there – but they do check cashing and money transfer and various financial services. So we didn’t see that as having a negative impact on the availability of credit for households has been positive as people find traditional ways of accessing credit that do not leave them in a debt trap that leads to bankruptcy and people lose their accounts due to fees. discovered.”

Click to read the text of the Payday Loan Initiative.

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