DENVER — Proposition 111, which passed in Colorado during the 2018 midterm election, caps interest rates from Payday lenders at 36 percent.
Currently the average payday lending loan in Colorado has an interest rate in Colorado of 129%.
Proposition 111, which passed last week and caps interest rates at 36 percent for payday lenders, already closing down some shops. Owner of this one tells me new law just wouldnt make the loan risk worth it. #copolitics #kdvr pic.twitter.com/2MCargmbKM
— Joe St. George (@JoeStGeorge) November 16, 2018
The measure is already forcing some businesses to close.
Payday Loans in Aurora, which has been in business for 25 years, announced they will be closing. The owner told FOX1 off camera the risk to loan money to risky borrowers is no longer worth it.
Supporters of Proposition 111 remain grateful voters overwhelming passed the measure. The campaign’s goal was to limit these businesses — calling them “predatory.”
“It takes effect on February 1st of next year,” Corinne Fowler, campaign manager for Proposition 111, said.
“Most likely some will close,” Fowler added.
The market for payday lending will not go away however.
Traditional banks are not subject to these regulations because they are regulated by the Federal Government. FOX31 has learned those banks are exploring possible short term loans to fill the void in the market.
Dez, a customer of Payday Loans, says she needs the financial option to help pay bills during months she is struggling.
“It’s just to get through the pay week and stuff,” Dez said.
“Even though it`s not the best thing to do all the time but for that moment it`s helpful,” Dez added.
Kym Ray disagrees.
Ray was a victim of loans and says it resulted in hundreds of dollars in unneccesary costs and fees — on a small $300 loan.
“They are loan sharks — it’s awful,” Ray said.