The Colorado Attorney General's office reports that more than 165,000 state residents owed $56 million to payday lenders at the end of 2013 and the number of people taking out such loans is rising, according to an annual report.
Colorado residents who took out payday loans grew by more than 9% in 2013 compared with 2012, said Julie Meade, head of the attorney general's Consumer Credit Unit. A total of 481,000 Coloradans borrowed $189 million in 2013.
The rise is consistent with annual 9% jumps in the number of payday loan borrowers reported since 2010.
Under Colorado law, fees for payday loans include an origination fee, a cap of 45% interest and monthly maintenance fees, Meade said.
Deferred deposit loans, typically referred to as payday loans, are unsecured, high-interest personal loans based on a borrower's paycheck that thousands of low-wage earners resort to each month to cover emergency expenses.
The payday loan industry has been heavily scrutinized by federal and state regulators in the past few years for interest rates that exceed limits commonly set by states.
In Colorado, while the total number of payday borrowers jumped in 2013, the number of licensed payday lending companies actually decreased from 253 to 250, Meade added. There are an estimated 750 total payday loan locations in the state.
Pew Charitable Trust is promoting a 2010 Colorado law regulating payday lenders as a way to stop payday lender excesses, according to the AG's office. In a recent editorial, Attorney General John Suthers wrote that while access to payday credit remains widely available, "the loans previously took up 38% of an average borrower's paycheck. Now, they take up 4%. Borrowers are spending $42 million less each year and bounced check fees from lenders are down by more than half."
