Payday loans in Colorado

Are payday loans legal in Colorado?

Colorado caps the cost of small loans at 36% APR, so traditional payday loans with triple-digit rates are not offered by licensed lenders there.

The governing law is Colo. Rev. Stat. 5-3.1-101 et seq. (2018 Ballot Measure capped APR at 36%). Colorado Attorney General, Consumer Credit Unit licenses lenders and takes complaints.

What the 36% cap means

A lender licensed in Colorado cannot charge more than 36% APR on a small loan. On $300 borrowed for two weeks, 36% APR works out to about $4.14 in interest. At that price the two-week payday loan is not a viable product, so storefront payday lenders do not operate in Colorado. Longer installment loans from licensed lenders and credit unions are the legal options.

Before you deal with an online lender

1. Look the company up with Colorado Attorney General, Consumer Credit Unit. No license, no loan.
2. Never pay a fee up front to get a loan. That is the mark of an advance-fee scam.
3. Read the agreement for the finance charge, the APR and the due date before you give out bank details.

If you cannot repay a loan in Colorado

Contact the lender before the due date and ask for a payment plan in writing. If a lender or collector breaks the rules, file a complaint with Colorado Attorney General, Consumer Credit Unit and with the CFPB. Our guide to what happens if you don’t pay covers each step.

Lower-cost options in Colorado

• Credit union payday alternative loans (PALs): $200 to $2,000 at no more than 28% APR.
• A payment plan with the landlord, utility or hospital you owe often costs nothing.
• Local assistance: dial 211 for rent, utility and food programs near you.

See all payday loan alternatives or work out a loan’s price with the cost calculator.

How Colorado got here

Voters approved Proposition 111 in November 2018 with about 77% of the vote, and the 36% cap took effect on February 1, 2019. Before that, Colorado payday loans averaged well over 100% APR.