Cash Loan Industry Grows in Colorado
By J.J. CameronPayday Loan Writer
The number of residents borrowing money from sub-prime lenders and cash advance providers increased last year, according to data released Monday by the Colorado attorney general's office.
In the state, sub-prime lenders, who handle consumer loans with an annual percentage rate (APR) of 12 percent or more, must be licensed by the state and report their lending activity every year. The rules don't cover lenders that make prime loans; banks and credit unions; creditors that make indirect loans, such as automobile dealers; and mortgage companies that make first mortgage residential acquisition and refinance loans.
Meanwhile, the number of licensed instant cash loan lenders - who make small loans of as much as $500 for 40 days or less, due on the consumer's next payday - rose almost 14 percent in 2005 from 2004, the AG's office said.
In 2005, such compnaies made almost $500 million in payday loans to almost 250,000 Colorado consumers, up 34 percent from 2004 and up 101 percent from 2002. The average cash advance payday loan amount was slightly over $300 and was to be repaid in 18 days with an average annual percentage rate of 345 percent.
Also, almost 15 percent of borrowers had 13 or more payday loans, meaning they were in debt for at least six months of the year.
In related news, almost 10,000 Colorado consumers borrowed from small-installment lenders, who loan $1,000 or less with terms of between 90 days and a year, in 2005. The average small-installment loan amount was slightly more than $300 and was to be repaid in six and a half months.
While seemingly not as dangerous as quick cash loans, these resources are still not ideal for those in need.
