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A Complete Guide to Payday Loan Consolidation in Colorado
Prior to 2019, Colorado had relatively few payday loan restrictions in place. Referred to as deferred deposit loans in the state, interest rates used to skyrocket to over 350%. Luckily, state legislators have since implemented consumer-friendly rules that have sent many payday lenders packing. Still, for those who have come into financial difficulties due to payday loan debt, there is a solution: payday loan consolidation.
Payday loan laws in Colorado
Colorado only recently enacted strict payday loan laws throughout the state. Beginning in February 2019, the APR on these types of loans was capped at 36%. This measure single-handedly made Colorado one of the toughest payday loan regulators in the country.
Payday loans are limited to $500 or less in Colorado with a single rollover allowed. There is no set maximum loan term but the minimum loan term is six months or 180 days. Consumers are allowed to take out multiple loans at a time, however, there is a 30 day cooling-off period between loans.
Additional finance charges include an origination fee of up to 20% of the first $300 dollar loan, plus 7.5% for any amount higher than a $300 loan. There is also a monthly maintenance fee of up to $30. There is no penalty for early repayment in the state. Payday loans are overseen by the Colorado Office of the Attorney General.
Read more about payday loan laws in Colorado.
What will happen if you can’t repay a payday loan in Colorado
Colorado residents are prohibited from facing jail time if they are unable to repay their payday loan. That said, the lender can still pester you with letters in the mail, phone calls, and potentially with a court summons. Lenders are not required to verify a borrower’s ability to pay back their loan, so only enter into an agreement if you’re 100% confident you can repay it. Remember that lenders can’t harass you over repayment and you can file a complaint with the Colorado Office of the Attorney General if you feel they have overstepped.
What is the statute of limitations on payday loans in Colorado?
The statute of limitations in Colorado is three years. If a borrower is unable to pay back their loan, lenders have up to three years to attempt to collect the loan amount.
How to consolidate your payday loans in Colorado
Payday loans can be a heavy burden for borrowers. Fortunately, payday loan consolidation offers borrowers a way to reduce their high-interest debt. The most popular method for borrowers is to combine all their loans together into a single loan at a lower rate. This method, also known as credit consolidation or payday loan relief, typically has the borrower collaborate with a third-party company that pays down the original debt owed to the lender. In exchange, the borrower will pay a fixed amount monthly to the debt consolidation company at a much more manageable rate.
Borrowers can also consider a debt management plan (DMP) which offers a similar strategy just without the third-party company. Borrowers would come to an agreement directly with their lenders in order to get their loans lumped together under a single, reduced interest rate. A DMP isn’t always an option for certain lenders, but borrowers can always give it a try.
A less popular solution is for borrowers to take out a separate loan that they would use to pay down their other loans. Doing this allows for borrowers to have all their loans grouped together on one plate with a single interest rate. That being said, taking out another loan could lead to more debt for the borrower, including additional fees and penalties. Whichever method you consider, selecting a payday loan consolidation option can be the first step toward financial stability.
By the numbers: Payday lenders in Colorado
- Max loan term: Not specified, Minimum is 6 months
- Average loan amount: $300
- Maximum loan amount: $500
- APR Cap: Yes, 36%
- Number of payday lenders in Colorado: 59
- Average 14-day payday loan APR: 36%
- Collection fees: Origination fee up to 20% on first $300. 7.5% fee on loans higher than $300. Monthly maintenance fee of up to $30. Plus an NSF fee of up to $25.
- The poverty rate in Colorado: 9.3%
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How can I get help paying my payday loan in Colorado
For newer payday loan borrowers, the debt trap you can find yourself in has been significantly reduced in risk thanks to recent legislation. However, even a small amount of debt can be tremendously stressful and cause undue harm to the borrower and their financial situation. Payday loan consolidation can be one of the best options available to get you back on your feet.
1300 Broadway 10th Floor
Denver, CO 80203
Phone number: 720-508-6000
Additional state resources to utilize: