In the event of delay or non-payment of loans, the lender will cash the check and take out the money. It is not mandatory to contain the required balance in the check while writing it. But the amount should be made available before the time of repayment.

Keeping the predatory nature of these loans in mind, Colorado payday loans laws have been put into practice. So, if you are living in Colorado then there are few important things that you must know about payday loans laws. This article will take you through various aspects about state laws meant to regulate payday lending in Colorado.

Payday lending status in Colorado-

In Colorado payday lending is legal. This means payday loans or deferred deposit loans are offered in this state. As per Colorado payday loans laws, the maximum limit of loan amount and a minimum loan term will be fixed.

The maximum limit should not go beyond $ 500 at one given time. The loan amount can be borrowed for minimum of 6 months and this term can stretch longer. It should be noted here that interest rate is capped at 36% a year. For details related to debt limits pay visit to this link

If a borrower is taking out consecutive loans one after another then the total amount should not exceed $ 500 at a given time. Apparently there is no limit on number of loans that can be taken. The cooling off period between loans should be 30 days. This means once the borrower completes one deferred deposit transaction then he or she can enter into an agreement with a new lender.

Before February of 2019, terms and conditions that regulated payday loans in Colorado were quite lenient. It was an unsuccessful attempt when better regulations were tried to introduce in 2007. However, in 2010 it was a huge success and since then everything changed completely.

From 1st February 2019, some amendments have been made and new law namely Proposition III was introduced. Instead of making of payday lending illegal in Colorado, the new law just required the interested lenders to comply with 36% APR cap. Although the new law did not bring an end to payday lending era in Colorado but it had definitely laid the foundation for it.

Interest rates and other fees-

In case of any short term loan like payday loans, interest not more than 36% can be levied. As origination fee, maximum 20% of the first $ 300 and 7.5% of any amount above $ 300 loan should be charged. Plus, maintenance fee of maximum $ 30 per month can be charged. The best part is that you can repay early if you can afford and without paying any extra fees for early repayment.

Collection limits-

Colorado payday loans laws prevent the lender to take any legal action against the borrower even though loan repayment is not done on time. But the law is not able to protect any borrower who has closed his or her checking account prior to loan payment. This also indicates that a borrower despite failing to repay on time is safe as per law if he or she is maintaining the checking account well.

The lender cannot make any attempt to sue the borrower for late or missed payments. These laws are applicable for both online lenders and storefront lenders. Any lender who is found to disobey any of the rules and regulations will be subject to civil penalties.

Consumer Information-

Colorado payday loans laws allow one NSF collection fee not more than $ 25 to be charged. In the event of non-payment, the loan amount and the attorney fees should be recovered through the court trial. Collection agencies should not be involved to take any actions against the borrower. Such involvement is allowed only when the checking account of the borrower is found closed before repayment could be completed.

There is another limitation stated by Colorado payday loans laws and that prohibits splitting of the loan into two parts. This is intended to prevent the lenders from charging separately for both parts of loans and earning profit. So, this forbids the lender from fetching more money from the borrower.


When financial conditions are tight and unforeseen expenses are knocking at your door, you cannot help but think of getting a loan till your next influx of funds. Despite the fact that payday loans can reduce stress, these loans are always a temporary solution to financial problems. It is because these loans can help in limited circumstances. Get yourself acquainted with various aspects of Colorado payday loans laws before you take the plunge.

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