Regional
(2010-07-26)
GREELEY, CO
(KUNC) -
New rules for payday lending operations in Colorado take effect next month. Supporters say the new laws will protect borrowers from interest rates as high as 500 percent. But not everyone in the state is happy with the changes. Many payday lenders opposed the overhaul, which passed the state legislature this year. They say the new rules will make it impossible to offer short-term emergency cash loans that many Coloradans need. And some large payday lending chains have already announced plans to close many of their shops in the state. Corrine Fowler is co-chair of Coloradans for Payday Lending Reform, a statewide coalition that worked for the overhaul. She says alternatives are available, thanks to credit unions and other organizations offering similar loans at much lower rates.
"They thought they would create an alternative product because they saw the need, and they saw their customers were paying these exorbitant interest rates and wanted to help them with that."
Fowler says many of the credit union loans will be offered at 18 percent interest with no credit check, but borrowers need to have a source of income just like with a commercial payday loan. When the law takes effect on August 11th, payday loan interest rates will be capped at 45 percent. Fowler says as part of a compromise in the bill, lenders will be allowed to charge additional fees. But overall she expects borrowers will end up paying about 60 percent less than without the changes.
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