Posted: Feb 22, 2010 8:30 AM by Associated Press
State Rep. Mark Ferrandino and Sen. Chris Romer are announcing legislation targeting payday loans.
Consumers taking out payday loans give the lender a postdated check for the amount of the loan plus a fee. The lender holds the check for about two weeks, when the money is repaid or the check is cashed.
Colorado caps finance fees at 20 percent of the loan for the first $300, then an additional 7.5 percent on any amount over that, up to $75. That can mean an average annual percentage rate of more than 300 percent.
Ferrandino says he plans to introduce a bill Monday to limit lenders to a 36 percent annual percentage rate.
Ferrandino and Romer are Denver Democrats.