By a one-vote margin, the House on Tuesday sent Gov. Bill Ritter legislation putting new limits on payday loans that supporters said would help break a cycle of debt by borrowers.
On a 33-32 vote, the House agreed to a Senate version that essentially does away with traditional, two-week payday loans as they exist in law now, replacing them with loans that can be paid back over as long as six months. Under current law, payday lenders can charge fees that amount to a more than 300 percent interest rate measured as an annual percentage rate.
Under the Senate version, lenders still would be able to charge up to $675 in interest and fees on a $500 loan, if a borrower extended the loan another six months.
Rep. Mark Ferrandino, D-Denver, said the reworked version of the bill would give borrowers enough time to pay back the loan early instead of being caught in a cycle of loan rollovers every two weeks.
Critics of the bill, mostly Republicans but a few Democrats as well, said the legislation would cost Colorado jobs. Five Democrats voted against the bill.
“The Senate has taken a bad bill and made it marginally better,” said Rep. Larry Liston, R-Colorado Springs. “This might only put a third of the industry out of business.”
