(Oct. 30) – Speaker Mark Ferrandino said that a report released today by The Pew Charitable Trusts, an influential policy research organization based in Washington, D.C., provided a “national showcase” for the Colorado law he sponsored in 2010 to curtail predatory practices by the payday lending industry.
HB10-1351 reduced interest rates and fees and extended the term of non-bank-issued loans from two weeks to a minimum of six months, giving borrowers some breathing room and making it harder for predatory payday lenders to lure them into borrowing again and again, trapping them in a black hole of debt. The new law saved Coloradans nearly $100 million in 2011, the first full year it was in effect, and stats from the Colorado Attorney General’s office show it has helped reduce the number and dollar amount of payday loans by 60 percent.
“We’ve saved Colorado consumers tons of money and pulled thousands out of a never-ending cycle of debt, while still providing access to credit and keeping businesses going,” Speaker Ferrandino said.
The Pew report focused on the Colorado law, presenting it as an attractive alternative for the 35 states that allow conventional two-week payday loans.
“Colorado’s unique six-month installment loan includes a variety of carefully designed protections, works better for consumers than a lump-sum payday loan, and is viable for lenders,” the Pew report states. “Colorado’s payday loan law shows it is possible to ensure widespread access to loans of $500 or less for people with poor credit histories, at prices far lower than those charged for conventional payday loans.”
Speaker Ferrandino said the report “gives us a national showcase for what we’ve been able to do here in Colorado. Our experience can be a guide for the federal Consumer Finance Protection Bureau and other states looking to defend some of their most economically vulnerable families from exploitation.”