As a sign of the ever changing financial times in the United States, we as citizens have had to look to more creative ways of making ends meet. It’s not uncommon, for most of us to have to turn to alternative sources, that may be deemed a little outside of the box – in order to reach our destination. With the growth of the Internet, we have discovered new and more creative ways to save and make money, and we’ve also found new and accessible methods of being able to obtain finances (especially in emergency situations). One such method that has become increasingly more popular over the last several years is the payday advance; utilizing a payday advance loan, a consumer can borrow up to set limits for anywhere from two weeks to 40 days (the actual term limit in the state of Colorado). Having access to these funds has proven to make a difference in millions of lives across the country, as the popularity of this method of obtaining emergency funds has grown and grown continually – to the point of becoming a mainstream industry — from what was once a bit of a cottage industry, and seldom used by most Americans.
Prior to the boom of the cash advance industry, the only alternative was to traditional funding were pawnshops and check-cashing operations; these outlets provided some degree of relief in an emergency situation, but they came at great costs to many individuals around the country. Everyone is familiar with someone who has lost a treasured memento or asset to a greedy pawnshop operator. Now that Colorado has joined a slew of other states in enacting laws specifically said to govern the operations of cash advance services, pawn shops and check cashing operations no longer are able to carry on this type of business; people now have a viable option to turn to. With the passing of Colorado’s statute 5 – 3.1 – 101, the state became a safe haven for consumers who wanted to take advantage of Colorado payday loans without all of the risks and unexpected laws that they would previously stand to deal with.
The Colorado payday loans statutes said very clear conditions for cash advances to be issued within the state; Colorado it is one of the most liberal, in terms of time allotted to consumers to repay their cash advances – with a maximum loan term of up to 40 days. Having the opportunity to take advantage of a cash advance that does not have to be paid for up to 40 days, allows the consumer a great amount of leeway, as they are likely to see several paydays between the time of the loan being obtained and its due date. This means that the consumer has the opportunity to set aside reasonable portions of their paychecks during that period so that they can pay off the loan all at once. A valuable point that should not be missed at this juncture is that cash advances in the state of Colorado are also limited to one at a time per consumer -meaning that a borrower cannot take out a second cash advance to pay for the first. The state does allow one renewal or rollover of a cash advance loan, but this is more of an extension than a second loan being taken out. With a second loan, a consumer would be facing twice the fees as they accumulated on two different loans at one time- for instance, if you borrowed $300 in your first payday loan (with fees of 20%), and then you proceeded to obtain a second advance in the amount of $300 to pay off the first – you would still have a responsibility of repaying $60 on each of the two loans – if that $60 was not paid in a timely fashion, you find yourself facing accumulating interest charges and accumulating fees. To preclude this from happening, the state simply set the limit of one loan at a time to keep things very simple.
Another part of the Colorado payday loans statutes dictate that the maximum amount that a consumer can borrow at any one time is set at $500; which is also on the generous end when compared to most other states. Some states have lending limitations on cash advances said at between $250 and $300, and provide only 14 days in most cases to repay the loan. In Colorado consumers can borrow up to $500, take $100 or so out of each of their subsequent paychecks, and have more than enough to repay their loan by the due date.
The Colorado payday loan statute also sets limitations on the amount of interest and finance fees that a cash advance company can charge to a consumer for a payday loan; the maximum charge for a loan of $1-$300 is 20% (which, if taken into consideration, is a mere twenty cents on the dollar – for a loan that can extend well over a month). For larger loans of $301-$500, the borrower is only required to pay the initial 20% on the first $300, but only 7.5% on any amount over and above the $300; this means that when a consumer borrows the full maximum amount allowed by state of Colorado, they are only paying roughly 15% overall: an amount that is considered very tangible in the payday loans arena.
In summation, Colorado is to be applauded for its efforts in providing a beneficial environment for cash advance services, and for the consumers that they are attempting to serve; without the state setting the stage for proper operation of cash advance services, it is likely that the state would be in facing an influx of disreputable companies seeking to gouge the consumer and take advantage of them in a time of weakness. Because of the state’s efforts to regulate the industry, consumers can pretty much rest assured that their best interest is being looked out for by government watchdogs, who are monitoring and keeping tabs on all of the cash advance services operating within the state.