HB10-1351, sponsored by Rep. Mark Ferrandino (D-Denver), extended the term of payday loans from about two weeks to a minimum of six months, giving borrowers some breathing room and making it harder for payday lenders to lure them into borrowing again and again, trapping them in a deepening vortex of debt.
In its annual report on the payday lending industry, Suthers’ office said today that the number of payday loans declined from 1,110,224 loans in 2010 to 444,333 in 2011. The dollar amount of these loans also fell from $409 million in 2010 to $167 million in 2011, it said.
Using the stats from the AG office’s report, Rich Jones of the Bell Policy Center in Denver calculated that the new law is saving Colorado consumers $223.90 per payday loan — $99.5 million less, overall, than their borrowing costs under the old law.
Suthers’ office said the average contracted APR for payday loans declined to 192 percent in 2011. It was 339 percent before the new law went into effect in August 2010, the report said.
The report also counted 330 licensed payday lending locations in Colorado at the end of 2011, contradicting claims by payday lenders that the 2010 law would put the industry out of business.
“The law is working to help vulnerable Colorado workers,” Rep. Ferrandino said. “Those who require the services of a payday lending establishment can still find one. But now, consumers won’t routinely emerge from a payday loan deeper in debt than they were before.”