Payday lenders start closing after voters cut interest rates
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DENVER – Proposition 111, which passed in Colorado in the 2018 midterm election, caps payday lender interest rates at 36%.
Currently, the average Colorado payday loan has an interest rate in Colorado of 129%.
Proposition 111, which passed last week and caps interest rates at 36% for payday lenders, is already shutting down some stores. The owner of it tells me that the new law just wouldn’t 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 existence for 25 years, has announced its closure. The owner told FOX1 off-camera that the risk of lending money to subprime borrowers is no longer worth it.
Proponents of Proposition 111 remain grateful to voters who overwhelmingly adopted the measure. The aim of the campaign was to curb these businesses – calling them “predators”.
“It will take effect on February 1 of next year,” said Corinne Fowler, campaign manager for Proposition 111.
“Most likely, some will close,” Fowler added.
The payday loan market will not go away, however.
Traditional banks are not subject to these regulations because they are regulated by the federal government. FOX31 has learned that these banks are exploring possible short-term loans to fill the void in the market.
Dez, a Payday Loans client, says she needs a financial option to help pay her bills during the months she struggles.
“It’s just to get through pay week and stuff,” Dez said.
“Although it’s not the best thing to do all the time, but right now it’s useful,” Dez added.
Kym Ray disagrees.
Ray was a victim of loans and says it resulted in hundreds of dollars in unnecessary costs and fees – on a small loan of $ 300.
“They’re loan sharks – it’s awful,” Ray said.
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