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Capped at 36% APR with no origination or maintenance fees — and unusually, the cap was imposed by voters directly, not by the legislature.
Proposition 111, approved by voters 6 November 2018
Not a legislature, not a regulator — a ballot initiative. Roughly 1,427,000 votes to 433,000. The measure reduced allowable charges on payday loans to 36% APR and eliminated the other finance charges and fees that had sat on top.Colorado · Ballot measureProposition 111 — reducing allowable charges on payday loans to an annual percentage rate of no more than thirty-six percent
Before it, the average APR on a Colorado payday loan was around 186% — and that was already after a 2010 reform. The prior structure allowed 20% of the first $300 plus 7.5% above it, so a $500 loan could carry $75 in charges.Colorado · Attorney GeneralColorado AG consumer lending study — prior to the referendum the average APR on deferred deposit loans had been 186 percent
Deferred Deposit Loan Act, C.R.S. § 5-3.1-101 et seq. · Effective 1 February 2019
The state’s own consumer lending study found a significant decrease in the number of lenders making deferred deposit loans and in licensed locations.Colorado · Attorney GeneralColorado AG consumer lending study, January 2023 — significant decrease in the number of lenders making deferred deposit loans and in licensed locations
That is the honest picture and it differs from Illinois, where other lenders expanded into the space. Both outcomes are real, and which one a state gets appears to depend on what else its rules permit.
A federal law from 1980 — the Depository Institutions Deregulation and Monetary Control Act — lets a state-chartered, federally insured bank charge out-of-state customers the rate allowed in the bank’s home state, not yours.
That is the standard route around a state rate cap, and Colorado has been litigating its position on it. If your lender is a bank based elsewhere, the 36% cap may not reach the loan.
You can revoke authorisation and instruct your bank to stop the payment, whatever your agreement says.
What Regulation E says about automatic payments →
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A payday loan is a consumer debt. If it goes unpaid, two Colorado rules decide what a lender can do next: how long it has to sue you, and how much of your pay a court can order taken.
Being sued over an old payday loan? A collector can still file, but the time limit is a defence you can raise — and you cannot be jailed for the debt. What can and cannot happen if you don’t pay →