When you have unplanned expenses and are on a tight budget, a payday loan could be helpful. Payday loans, a type of short-term loan, give you quick access to money when you need it. Read on to find out about the laws in Colorado and everything else you should know about how payday advances work.
If you’re facing a financial emergency, you may be considering a payday loan. Colorado law regulates payday, or short-term, loans heavily. Our guide will detail the costs of borrowing and what laws your lender must abide by.
Can I get a payday loan in Colorado?
Yes. Short-term loans are legal in Colorado. The Deferred Deposit Loan Act under the Colorado Revised Statutes 5-3.1-101 et seq. governs the functioning of all short-term lenders in the state.
The amount you borrow in payday loans through any one lender cannot exceed $500. The minimum loan term is six months, and there is no set maximum. You have the right to rescind (cancel) a payday loan before 5 p.m. the next business day after the loan transaction takes place.
Five quick facts about payday loans in Colorado
- Maximum loan amount: $500
- Minimum loan term: 6 months
- Maximum loan term: None
- Maximum APR: 45%
- Rollovers: You are permitted 1 rollover.
There is no limit on the number of loans borrowed as long as the combined total doesn’t exceed $500. If you pay off your loan early, your lender must refund you a pro-rated amount of interest based on the remaining term of your loan.
What fees will I have to pay?
Although Colorado has laws in place to protect consumers from predatory lending, you’ll still have to pay some fees when you borrow.
- Finance charges: A lender can’t charge more than 20% for the first $300 borrowed. They may charge an additional 7.5% per $100 for any amount over $300.
- Maintenance fees: The maintenance fee can’t exceed more than $7.50 per $100 loaned, up to a maximum of $30 per month the loan is outstanding.
- Non-sufficient funds (NSF) fees: Lenders can charge $25.
- Collection fees: If you fail to repay your loan, a lender can charge you the full amount of the loan and attorney fees if the default is brought to court.
What should I keep in mind before applying?
If you’re struggling to make it between paychecks, a short-term loan could help you through your financial troubles. Colorado law heavily regulates lenders, and unlike other states, the minimum term for a loan is six months. This means a payday loan functions more like an installment loan.
However, keep in mind that these are still expensive solutions to a temporary problem. Colorado does have a few assistance programs that can help you, like the Low Income Energy and Heating Assistance (LEAP), which can lower the cost of your energy bill. Government assistance programs are just one alternative to costly payday loans.
How can I apply for short-term loan?
If you’re interested in applying for a short-term loan in Colorado, you’ll need to meet the following eligbility criteria:
- Be at least 18 years old
- Be a US citizen or a permanent resident
- Have a regular source of income
To complete your application successfully, prepare to submit some basic information:
- Personal details, such as your name, date of birth, Social Security number and a valid form of ID
- Contact details, such as your residential address, email address and phone number
- Details about your employment and income
Bottom line
If you’re considering taking out a payday loan, familiarize yourself with the laws of Colorado to make sure you’re getting the best terms for your loan. As with all forms of credit, be prepared to pay for both the principal and accumulated interest.
Have any more questions about Colorado short-term loans?
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Ask an Expert
I took out an online payday loan. The fees are outrageous and I just can’t keep up anymore. I’ve already paid 4,000 on the initial 1700 I borrowed. What happens if I default?
Hello Michelle,
Thank you for your comment.
If you default on your loan, the lender may begin adding fees and increasing the interest rate. If the lender considers a debt in default, the loan may be turned over to a collection agency, which will affect your credit history and your credit score. Know more about the consequences when you default on a loan.
Should you wish to have real-time answers to your questions, try our chatbox on the lower right corner of our page.
Regards,
Jhezelyn
My daughter has leukemia and I missed two weeks of work recently I was only payed 48 dollars and I owe rent whichbis 675.00 dollars on the first. I dont have a bank acvount technically, but I do have a money network debit card that is also a payroll card that I get my pay checks loaded to direct deposit from my employer.I have had my taxes loaded on there and it is reloadable through money grahm,western unuion and green dot. I work full time and make over a grand usually a payday plus I have zero debt and a good credit score just not a long history of established credit.. I need a online or in person loan but I dont have a bank account. Can you help?
Hi Jason,
Thanks for getting in touch with finder.
I’m sorry to hear about your daughter’s illness. I hope all things will work out together for good for you.
Regarding your situation, there are limited loan options for you. However, we do have a page that will help you know how to get a payday loan on a prepaid debit card. Please feel free to read that page to learn more.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua