Payday Loans in Colorado

Payday Loans
Unforeseen expenses can disrupt even the best financial plans. Payday loans in Colorado can offer a lifeline in these situations, providing quick cash to bridge the gap until your next paycheck. In this article, we explore the concept of payday loans, their advantages, potential pitfalls, and how to effectively utilize them. We also discuss the application process, eligibility criteria, and important considerations when repaying these loans.
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What are Payday Loans in Colorado?

A payday loan is a short-term loan that typically has a high-interest rate and is meant to be repaid on the borrower's next payday. In Colorado, payday loans are regulated by state law to ensure they are safe and fair for consumers.

Under Colorado law, payday loans cannot exceed $500 and must have a minimum loan term of six months. The interest rate on a payday loan in Colorado is capped at 36%, much lower than the rates in many other states.

To obtain a payday loan in Colorado, a borrower must provide proof of income and a valid government-issued ID. The lender will then assess the borrower's ability to repay the loan and may require additional information or documentation.

Payday Loans in Colorado

What is the Payday Loan Limit in Colorado?

In Colorado, payday loans are subject to certain regulations to protect consumers. The payday loan limit in Colorado is $500 per loan. Additionally, the loan term must be a minimum of six months, and lenders are not allowed to charge more than 36% interest on the loan. These regulations are intended to ensure that payday loans are safe and fair for borrowers in Colorado. It's important to keep in mind that payday loans can be costly and may lead to a cycle of debt if not repaid on time. If you're considering a payday loan, it's important to carefully consider the terms and your ability to repay the loan before borrowing.

How To Borrow Payday Loan in Colorado?

Apply for a loan

  1. Find a licensed lender. Make sure to choose a licensed lender that is authorized to operate in Colorado. You can check with the Colorado Department of Business Oversight to see if a lender is licensed.

  2. Apply for the loan. To apply for a payday loan, you will typically need to provide personal information, including your name, address, and employment details. You may also need to provide proof of income, such as a pay stub.

  3. Review loan terms. Before accepting a loan, review the terms and conditions carefully, including the interest rate, fees, and repayment schedule.

  4. Sign the loan agreement. If you decide to accept the loan, you must sign a loan agreement outlining the terms and conditions.

  5. Receive funds. Once you have signed the loan agreement, you should receive the funds either in cash or by direct deposit into your bank account.

  6. Repay the loan. Repay the loan on or before the due date, which is typically up to 31 days. Make sure you understand the repayment terms and have the funds available to repay the loan, including any fees and interest.

It is important to note that payday loans can be expensive and should only be used as a last resort. Before applying for a payday loan, consider other options, such as borrowing from friends or family or obtaining a personal loan from a bank or credit union.

Pros and Cons

Pros

Quick access to cash. Payday loans can provide fast access to cash, which can be helpful in an emergency.

No credit check. Unlike traditional loans, payday lenders do not typically require a credit check, which can make them an option for people with poor credit.

Easy application process. The application process for a payday loan is typically simple and can be completed online or in person at a payday lender's office.

Cons

High-interest rates. Payday loans in Colorado can have high rates, making them costly. The interest rate on a payday loan in Colorado is capped at 36%, but even that can still be much higher than other types of loans.

Short repayment terms. Payday loans are typically due on the borrower's next payday, which can be as little as two weeks away. This short repayment term can make it difficult for borrowers to repay the loan in full and can lead to a cycle of debt.

Risk of fraud. Many fraudulent payday lenders are out there, so borrowers need to be careful when choosing a lender. Choosing a licensed lender and reading the loan agreement carefully before agreeing to any terms is important.

Can lead to a cycle of debt. Because of the high-interest rates and short repayment terms, payday loans can lead to a cycle of debt, where borrowers take out new loans to pay off old ones.

Requirements

  1. Be at least 18 years old. You must be at least 18 years old to apply for a payday loan in Colorado.

  2. Have a steady source of income. You'll need to have a steady source of income, such as a job or government benefits, to be eligible for a payday loan in Colorado. You'll typically need to provide proof of income, such as a pay stub or bank statement.

  3. Have a checking account. You'll need to have a checking account in your name to be eligible for a payday loan in Colorado. This is because payday lenders typically require borrowers to provide post-dated checks or access to their bank accounts as collateral for the loan.

  4. Provide identification. You'll need to provide identification, such as a driver's license or state ID, to apply for a payday loan in Colorado.

  5. Not be in the military. Active-duty military members and their dependents are not eligible for payday loans with a rate of over 36% under federal law.

  6. Meet other lender-specific requirements. Each payday lender may have additional requirements, such as a minimum credit score or maximum debt-to-income ratio, that you'll need to meet to be eligible for a loan.

Rates

  1. Maximum loan amount: $500

  2. Minimum loan term: 6 months

  3. Maximum interest rate: 36%

  4. Finance charges and fees: lenders can charge a monthly maintenance fee of up to $30 per month and a one-time origination fee of up to 20% of the loan amount.

  5. Repayment plan: if a borrower is unable to repay the loan on the due date, the lender must offer a repayment plan at no additional cost to the borrower. The repayment plan must be for at least four equal payments over a period of at least 60 days.

Online Lenders

Apply for a loan

  • Check Into Cash is a national payday lender with several locations in Colorado and an online platform where borrowers can apply for loans.
  • Moneytree is a payday lender with locations in several states, including Colorado. They also offer online payday loans to Colorado residents.
  • Ace Cash Express is a payday lender with several locations in Colorado and an online platform where borrowers can apply for loans.
  • CashNetUSA is an online lender that offers payday loans, installment loans, and lines of credit to Colorado residents.

    Non-online Lenders

    Apply for a loan

    • Advance America has over 100 locations in Colorado, and they offer payday loans, installment loans, and other financial services.
    • Check 'n Go has over 40 locations in Colorado, and they offer payday loans, installment loans, and other financial services.
    • Speedy Cash has over 20 locations in Colorado, and they offer payday loans, installment loans, and other financial services.

      Alternatives to Payday Loans in Colorado

      1. Personal installment loans. Personal installment loans are a type of loan where the borrower receives a lump sum of money and then repays the loan with interest over a set period of time. These loans can be a good alternative to payday loans because they usually have lower interest rates and longer repayment terms.

      2. Credit union loans. Credit unions are non-profit financial institutions that offer a variety of financial products and services, including loans. Many credit unions offer small-dollar loans with low-interest rates and more flexible repayment terms than payday loans.

      3. Community assistance programs. Many communities in Colorado provide emergency financial assistance to residents struggling to pay for basic needs like rent, utilities, and food. These programs may offer grants or low-interest loans that can help borrowers avoid high-interest payday loans.

      4. Negotiating with creditors. If you're struggling to pay your bills, you may be able to negotiate with your creditors to set up a payment plan or reduce your payments. This can help you avoid taking out a payday loan to cover your expenses.

      5. Side jobs and gig work. If you need extra money to cover your expenses, you may be able to find side jobs or gig work that can help you earn some extra cash. There are many online platforms that connect workers with short-term, flexible jobs.

      Payday loans are legal in Colorado, but there are regulations in place to protect borrowers from predatory lending practices. These regulations are enforced by the Colorado Attorney General's Office and the Colorado Office of the Administrator of the Uniform Consumer Credit Code (UCCC).

      1. Loan amount limits. Payday lenders in Colorado can only lend up to $500 per loan. Borrowers cannot have more than two outstanding loans with a total loan amount of more than $500.

      2. Interest rates and fees. Payday lenders in Colorado can charge up to 36% interest rates, plus a one-time origination fee of up to 20% of the loan amount. This means that a borrower who takes out a $300 loan would pay up to $60 in fees and up to $108 in interest charges.

      3. Repayment periods. Payday lenders in Colorado must give borrowers at least six months to repay the loan. Lenders cannot charge a penalty for prepayment.

      4. Cooling-off period. After a borrower has taken out five consecutive payday loans, the borrower must wait at least 30 days before taking out another loan.

      5. Licensing requirements. Payday lenders in Colorado must be licensed by the state and comply with all state and federal lending regulations.

      Important

      Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

      How to Choose a Lender

      1. Make sure to confirm whether the lender is licensed to operate in your state. You can verify this information with your state regulator or attorney general.

      2. Check if the lender is a member of a reputable association, such as the Community Financial Services Association of America. Membership in such organizations may provide an extra level of reliability.

      3. Carefully review all the terms and conditions of your payday loan contract.

      4. Thoroughly examine the interest rates on payday loans and ensure that your contract includes a detailed breakdown of the total cost of the loan.

      5. Take advantage of your right of rescission. Usually, you can rescind the loan within three days after signing the agreement. Alternatively, there is typically a "cooling-off" period, which allows you several days to thoroughly review the contract before making an informed decision to enter into a consumer loan agreement based on the terms specified by the lender.

      6. Choosing a payday lender is a significant decision that demands careful consideration and a good understanding of how such organizations operate.

      Other Loans

      FAQ

      Are online payday loans legal in Colorado?

      Yes, online payday loans are legal in Colorado but are subject to the same regulations as brick-and-mortar payday lenders. Online payday lenders in Colorado must be licensed by the state and comply with all state and federal lending regulations.

      Here are some of the key regulations governing online payday lending in Colorado:

      1. Loan amount limits: Payday lenders in Colorado can only lend up to $500 per loan. Borrowers cannot have more than two outstanding loans with a total loan amount of more than $500.

      2. Interest rates and fees: Payday lenders in Colorado can charge up to 36% interest rates, plus a one-time origination fee of up to 20% of the loan amount. This means that a borrower who takes out a $300 loan would pay up to $60 in fees and up to $108 in interest charges.

      3. Repayment periods: Payday lenders in Colorado must give borrowers at least six months to repay the loan. Lenders cannot charge a penalty for prepayment.

      4. Cooling-off period: After a borrower has taken out five consecutive payday loans, the borrower must wait at least 30 days before taking out another loan.

      5. Licensing requirements: Online payday lenders in Colorado must be licensed by the state and comply with all state and federal lending regulations.

      It's important for borrowers to carefully review the loan terms and fees before taking out an online payday loan and to consider alternatives if possible. Suppose a borrower believes an online lender violated any of Colorado's payday lending regulations. In that case, they can file a complaint with the Colorado Attorney General's Office or the Colorado Office of the Administrator of the UCCC.

      How many payday loans can you get in Colorado?

      In Colorado, there is no apparent limit on the number of payday loans a borrower can have at one time. Still, payday lenders must provide a notice to borrowers with multiple outstanding loans. However, the total loan amount cannot exceed $500, and borrowers must have at least 30 days between consecutive loans if they have taken out five or more payday loans in a row.

      It's important to remember that payday loans can be costly and lead to a cycle of debt. Before taking out a payday loan, borrowers should carefully consider the fees and interest rates associated with the loan and explore other options, such as borrowing from a credit union or getting a small loan from a bank.

      What do you need for a payday loan in Colorado?

      To apply for a payday loan in Colorado, borrowers typically need to provide the following information:

      1. Identification: Borrowers must provide a valid government-issued ID, such as a driver's license or passport.

      2. Proof of income: Borrowers must provide proof of income, such as a pay stub or bank statement, to show that they have a steady source of income and can repay the loan.

      3. Bank account information: Borrowers must provide their bank account information, including their account number and routing number, so the lender can deposit the loan funds and withdraw the repayment amount.

      4. Contact information: Borrowers must provide their phone number, email address, and mailing address so that the lender can contact them about the loan.

      5. Post-dated check or authorization for automatic withdrawals: Payday lenders in Colorado may require borrowers to provide a post-dated check or give permission for automatic withdrawals from their bank account to repay the loan.

      It's important for borrowers to carefully review the loan terms and fees before taking out a payday loan and to consider alternatives if possible. Borrowers should also make sure that the payday lender is licensed by the state and comply with all state and federal lending regulations.

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