Colorado Proposition 111 limiting payday loan interest rates goes into effect February 1, 2019

Colorado Proposition 111, the Limits on Payday Loan Charges Initiative, was on the ballot in Colorado as a citizen-initiated state statute on November 6, 2018. It was approved by a vote of 77 percent to 23 percent. The measure limited the interest rate on short term loans—commonly known as payday loans—to a yearly rate of 36 percent and eliminated all other finance charges and fees associated with payday lending. It goes into effect on February 1, 2019.
 
Before the approval of Proposition 111, the maximum charges allowed for payday loans in Colorado were as follows:
  1. a charge of up to 20 percent of the first $300 loaned,
  2. a charge of 7.5 percent for any amount loaned above $300,
  3. monthly maintenance fee up to $30 per month, and
  4. an additional annual interest rate of 45 percent.
 
The Yes on Proposition 111 campaign, also known as Coloradans to Stop Predatory Payday Loans, led the campaign in support of the measure, raising $2.2 million in contributions. The group argued that “Payday lenders take advantage of Colorado communities and trap working families in a cycle of debt.” Opponents of the measure included The State Ballot Issue Committee (also known as 13 Issues) and Jon Caldara, head of the Independence Institute. Opponents argued, “This measure may eliminate the payday lending business in Colorado. Payday loans provide options for consumers who may not qualify for other types of credit.”
 
Legal status of payday lending by state:
 
Thirty-two states (shaded in light blue on this map) authorize payday lending without limits on APR. Two states, Maine, and Oregon, (shaded in dark blue on this map) authorize payday lending with limits on APR, but permit lenders to charge extra fees on top of interest.



About the author

Jackie Mitchell

Jackie Mitchell is a state ballot measures staff writer at Ballotpedia and can be reached at jackie.mitchell@ballotpedia.org

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