DENVER (CBS4)– People gathered in Denver Thursday to celebrate the start of a new law that will lower interest rates on payday loans. Starting Friday, payday loan companies can no longer charge interest and fees that add up to over 200 percent APR. Instead, they must abide by Colorado’s usury cap of 36 percent.
The change comes after 77 percent of voters passed Proposition 111 in November last year. Coloradans will save an expected $50 million per year in payday loan fees.
Shikima Ray says several years ago she took out a payday loan for $500. She paid it back but was shocked to see how much she paid in interest.
“I realized it was triple digits, I was like whoa. It was a struggle because I still had all of our regular bills,” she told CBS4’s Dominic Garcia.
Ray felt compelled to do something and got involved with the Proposition 111 campaign. Her job was to interview other people who had bad experiences with payday loans. She heard one heartbreaking story after the other.
“People have lost their housing, had wages garnished on their jobs, lost their bank account. One young lady, she can’t even get an apartment now because her credit has been damaged too badly by these payday loans,” she told CBS4.
Supporters say the rule change applies to all payday loans made in Colorado whether made at a store, over the internet, or by phone. They add this change is the result of the largest win margin of any measure in the last 20 years, garnering bipartisan support and winning in nearly every county.