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.
“If there is a business model that allows people to earn a fair rate of return at 36 percent for challenging credit, I will support that business model, but people who charge people 300 percent would make the mob blush,” Romer said.
Payday loans industry supporters counter that they provide a business that 300,000 Coloradans use and can’t get anywhere else.
“These people are not without alternatives. They choose in overwhelming numbers the product that makes the most sense for them,” Ron Rockvam with the Colorado Financial Service Centers Association said.
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