Yes, payday loans are legal in Colorado, but the state heavily regulates lenders. 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.
Colorado has a borrowing limit of $500 on payday loans. There’s no limit on the number of loans you can take out as long as the amount you borrow doesn’t exceed $500 in total. The APR on payday loans in Colorado is capped at 36%. That rate is high compared to other short-term loan options but much lower than payday lenders in other states, where rates can reach triple digits.
The minimum loan term is six months — which makes payday loans in Colorado more like an installment loan — with no set maximum. If you change your mind, you can cancel your payday loan as long as you do it by 5 p.m. the next business day. And if you pay it off early, your lender has to refund you a portion of the interest based on how much time was left on your loan.
If you’re struggling to make it between paychecks, a short-term loan could help you through your financial troubles while avoiding a more expensive payday loan.
Payday alternative loans (PALs) are offered by many federally insured credit unions to help members avoid taking out expensive payday loans. These loans range from $200 to $1,000, with repayment terms between one and six months.
Interest rates are capped at 28% but may be lower depending on your credit profile and qualifications. Either way, the rates are still better than what payday lenders typically charge. You may also need to pay an application fee, but by law, it can’t exceed $20.
To get a PAL, you’ll need to be a member of a credit union that offers them. You can join just to take out the loan, but some credit unions require you to be a member for at least a month before applying. You’ll also need proof of consistent income and be in good standing with the credit union, with no delinquent accounts or negative balances.
Cash advance apps like Cleo, Dave or Brigit let you borrow money quickly without ever leaving your home. All you have to do is download the app, create an account, link your bank account and request the funds — there’s no application or credit check. And cash advance apps don’t charge any interest since they make money from app subscription fees or optional tips.
But cash advance apps aren’t for everyone. The borrowing limits start low for new borrowers and typically max out at $250 to $500, with a few apps offering more. Plus, you’ll have to pay an extra fee if you want your cash immediately. Otherwise, you’ll have to wait one to three business days to receive it. And you have little control over when repayment is made — it’s usually deducted automatically on your next payday.
When you take out a personal loan, you receive a lump sum up front, which is paid back in installments over a set number of months. Interest rates on personal loans vary widely depending on the lender you choose and your qualifications. But they tend to be less expensive than payday lenders, so you can still save money on interest.
Repayment terms also vary. You can choose to repay your loan anywhere from a few months to several years. But getting a personal loan is harder than taking out a payday loan. You need to meet certain credit score and income requirements to qualify. Plus, it may take a few days to get your application approved and receive your funds, which isn’t ideal if you need cash fast.
A credit card advance is when you borrow cash against the credit limit on your credit card. This option is quick if you need cash right away. And you don’t need to worry about qualifying for a loan or filling out paperwork. If you already have a credit card that offers cash advances, then you’re already approved.
But this is generally a last resort, as credit card cash advances come with a few major downsides. For one, APRs on cash advances are typically higher than what you pay for purchases. Plus, interest starts accumulating as soon as you take out the advance — there’s no grace period as with regular transactions.
The Finder Score crunches 3+ types of short-term loans across 65+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best short-term loans for all credit types, you can see how each short-term loan stacks up against other short-term loans with the same borrower type, rate type and repayment type.
Colorado has strict regulations in place to keep short-term loans from becoming too expensive, but you’ll still be required to pay fees when you borrow.
Lenders in Colorado can charge a loan origination fee up to 20% on the first $300 you borrow. For every $100 you borrow over that amount, you could be charged an additional 7.5%. On top of that, you may have to pay a monthly maintenance fee of up to $7.50 per $100 borrowed (capped at $30 per month). But all these plus your interest rate can’t equal more than 36% APR.
There could be a few additional fees charged in addition to your APR. For example, if your payment doesn’t go through due to insufficient funds, you might have to pay an NSF fee of up to $25. Some lenders also apply late payment fees.
Even with the limits Colorado places on loans, costs can add up quickly. To keep borrowing as affordable as possible, look for the lowest rates available and choose the shortest loan term you can manage.
If you’re struggling financially, payday loans may not be the best way to try and catch up; instead, contact a few assistance programs to see how they can help. Here’s a list to get you started:
Payday loans are legal in Colorado, but with a 36% APR cap and a six-month minimum term, they work more like installment loans. Even with regulations in place, they can still be expensive, so it’s worth considering other options first, like payday alternative loans, personal loans or cash advance apps.
Yes, Colorado allows payday loans. State law caps payday loan APRs at 36%, which is lower than several other states, but this form of borrowing is still expensive and should only be used as a last resort.
Yes, Colorado allows one payday loan rollover, which means you can extend your loan term if you can’t pay it off by the due date. But it’s not free — your lender will charge a fee for the extension.
There is no maximum limit as long as your debt doesn’t exceed $500 and there’s a gap of 30 days or more between loans.
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From pay advance apps to payday loans, you have a few options to choose from.
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.
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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