Colorado Payday Loans

Relevant Legal Excerpts for Colorado Payday Loans

Section 5-3.1-103. Written agreement requirements.

Each deferred deposit loan transaction and renewal shall be documented by a written agreement signed by both the lender and consumer. The written agreement shall contain the name of the consumer; the transaction date; the amount of the instrument; the annual percentage rate charged; a statement of the total amount of finance charges charged, expressed both as a dollar amount and an annual percentage rate; and the name, address, and telephone number of any agent or arranger involved in the transaction. In addition, the written agreement shall include all disclosures required by section 5-3-101 (2). The written agreement shall set a date upon which the instrument may be deposited or negotiated. There shall be no minimum loan term or minimum finance charge. The maximum loan term shall not be more than forty days after the loan transaction date, and the maximum finance charge shall not exceed the finance charge set forth in section 5-3.1-105

The due date shall be set on or after the consumer's next payday or the date the consumer is scheduled to receive benefits, a commission, or any other payment; or after an income event for the consumer unless the consumer voluntarily requests a shorter loan term, the consumer's request is documented in a written statement signed and dated by the consumer and is separate from the loan agreement, the written statement is retained by the lender, and the loan cannot be renewed and shall be paid in cash or its equivalent. A lender may hold an instrument and delay completion of the transaction beyond the loan due date without any additional written agreement or new disclosure, but the lender may not charge any additional fees for holding the instrument or delaying the completion of the transaction.

Section 5-3.1-104. Notice to consumers.

A lender shall provide the following notice in a prominent place on each loan agreement in at least ten-point type:

"A DEFERRED DEPOSIT LOAN IS NOT INTENDED TO MEET LONG-TERM FINANCIAL NEEDS. A DEFERRED DEPOSIT LOAN SHOULD BE USED ONLY TO MEET SHORT-TERM CASH NEEDS. RENEWING THE DEFERRED DEPOSIT LOAN RATHER THAN PAYING THE DEBT IN FULL WILL REQUIRE ADDITIONAL FINANCE CHARGES."

Section 5-3.1-105. Authorized finance charge.

A lender may charge a finance charge for each deferred deposit loan that may not exceed twenty percent of the first three hundred dollars loaned plus seven and one-half percent of any amount loaned in excess of three hundred dollars. Such charge shall be deemed fully earned as of the date of the transaction. The lender shall charge only those charges authorized in this article in connection with a deferred deposit loan.

Section 5-3.1-106. Maximum loan amount - right to rescind.

(1) A lender shall not lend an amount greater than five hundred dollars nor shall the amount financed exceed five hundred dollars by any one lender at any time to a consumer. No instrument held as a result of a deferred deposit loan shall exceed five hundred seventy-five dollars.

(2) A consumer shall have the right to rescind the deferred deposit loan on or before 5 p.m. the next business day following the loan transaction.

Section 5-3.1-107. Multiple outstanding transactions notice.

A lender shall provide the following notice in a prominent place on each deferred deposit loan agreement in at least ten-point type:

"STATE LAW PROHIBITS DEFERRED DEPOSIT LOANS EXCEEDING FIVE HUNDRED DOLLARS ($500) TOTAL DEBT PLUS APPLICABLE FINANCE CHARGES PERMITTED BY LAW FROM A DEFERRED DEPOSIT LENDER. EXCEEDING THIS AMOUNT MAY CREATE FINANCIAL HARDSHIPS FOR YOU AND YOUR FAMILY. YOU HAVE THE RIGHT TO RESCIND THIS TRANSACTION BY 5 P.M. THE NEXT BUSINESS DAY FOLLOWING THIS TRANSACTION."

Section 5-3.1-108. Renewal - new loan - consecutive loans - payment plan - definitions.

(1) A deferred deposit loan shall not be renewed more than once. After such renewal, the consumer shall pay the debt in cash or its equivalent. If the consumer does not pay the debt, then the lender may deposit the consumer's instrument.

(2) Upon renewal of a deferred deposit loan, the lender may assess additional finance charges not to exceed twenty percent of the first three hundred dollars loaned plus seven and one-half percent of any amount loaned in excess of three hundred dollars. If the deferred deposit loan is renewed prior to the maturity date, the lender shall refund to the consumer a prorated portion of the finance charge based upon the ratio of time left before maturity to the loan term.

(3) A transaction is completed when the lender presents the instrument for payment or the consumer redeems the instrument by paying the full amount of the instrument to the holder. Once the consumer has completed the deferred deposit transaction, the consumer may enter into a new deferred deposit agreement with the lender. If the consumer's instrument is dishonored by the payor financial institution after the transaction is complete and, before the lender receives a notice of dishonor, the lender makes a new loan that does not exceed the maximum allowable loan, the lender shall not be in violation of the maximum loan amount provisions in section 5-3.1-106

(4) Nothing in this section prohibits a lender from refinancing a deferred deposit loan as a supervised loan subject to the provision of this code, articles 1 to 9 of this title; except that the lender may not contract for or receive the minimum finance charge contained in section 5-2-201 (7).

(5)

(a) At the time of origination of a fourth consecutive deferred deposit loan made to a consumer by a lender or an affiliate of the lender, and at the time of origination of any subsequent consecutive deferred deposit loans, the lender shall offer the consumer in writing the option to participate in a voluntary payment plan.
(b) To convert a deferred deposit loan into a payment plan, the consumer shall return to the lender's point of sale location and request a payment plan prior to the close of business on the business day prior to the maturity date of the loan.
(c) The payment plan shall provide the consumer with the option to pay off the existing debt, both the principal and the fee, in at least six equal payments that coincide with the consumer's periodic pay dates or the date the consumer is scheduled to receive benefits. The payments made pursuant to the voluntary payment plan shall be applied directly to the existing debt, and the lender shall not charge the consumer any additional fee for participation in the payment plan.
(d) The lender shall provide a written copy of the payment plan agreement to the consumer. The lender shall be prohibited from engaging in collection activities while the consumer continues to make payments in accordance with the payment plan. The lender or affiliate of the lender is prohibited from making any additional deferred deposit loans to the consumer prior to the consumer's completion of the payment plan.
(e) The lender may require the consumer to provide a post-dated check or electronic authorization for funds transferred for each payment due under the payment plan. If any check or electronic authorization accepted by the lender is dishonored, the lender may not charge the consumer a fee for the dishonored instrument.
(f) If the consumer fails to make payments in accordance with a payment plan under paragraph (a) of this subsection (5), the lender is entitled to take action as allowed under this article to collect the remaining funds due and may charge the consumer a one-time default fee of twenty-five dollars.
(g) For the purposes of this subsection (5):

(I) "Affiliate" means any entity owned by a lender, an entity that owns the lender, an entity that is under common ownership with the lender, or an entity that is a person related to the lender.
(II) "Consecutive deferred deposit loan" means a deferred deposit loan made by a lender within five calendar days after the repayment of a previous deferred deposit loan by renewal or otherwise.
(III) "Lender's point of sale location" means:

(A) The lender's store where the consumer originated the loan;
(B) Another store operated by the lender in this state; or
(C) A web site, telephone number, or other remote location where the consumer originated the loan.

(IV) "Person related to" shall have the same meaning as in section 5-1-301 (34) (b).

Section 5-3.1-109. Form of loan proceeds.

A lender may pay the proceeds from a deferred deposit loan to the consumer in the form of a business instrument, money order, cash, stored value card, internet transfer, or authorized automated clearinghouse transaction. The consumer shall not be charged an additional finance charge or fee for cashing the lender's business instrument or for negotiating forms of loan proceeds other than cash.

Section 5-3.1-110. Endorsement of instrument.

A lender shall not negotiate or present an instrument for payment unless the instrument is endorsed with the actual business name of the lender.

Section 5-3.1-111. Redemption of instrument.

Prior to the lender negotiating or presenting the instrument, the consumer shall have the right to redeem any instrument held by a lender as a result of a deferred deposit loan if the consumer pays the full amount of the instrument to the lender.

Section 5-3.1-112. Authorized dishonored instrument charge.

If an instrument held by a lender as a result of a deferred deposit loan is returned unpaid to the lender from a payor financial institution due to insufficient funds, a closed account, a stop-payment order, or any other reason, not including a bank error, the lender shall have the right to exercise all civil means authorized by law to collect the face value of the instrument; except that the provisions and remedies of section 13-21-109, C.R.S., are not applicable to any deferred deposit loan. In addition, the lender may contract for and collect one returned instrument charge for each deferred deposit loan, not to exceed twenty-five dollars, plus court costs and reasonable attorney fees as awarded by a court and incurred as a result of the default. However, such attorney fees shall not exceed the loan amount. The lender shall not collect any other fees as a result of default. A returned instrument charge shall not be allowed if the loan proceeds instrument is dishonored by the financial institution or the consumer places a stop-payment order due to forgery or theft.

Section 5-3.1-113. Posting of charges.

Any lender offering a deferred deposit loan shall post at any place of business where deferred deposit loans are made a notice of the finance charges imposed for such deferred deposit loans.

Section 5-3.1-122. Unconscionability.

(1) In applying the provisions of sections 5-5-109 and 5-6-112 to the actions of a lender, consideration shall be given to the following, among other factors:

(a) The financial benefits of the loan to the consumer and the level of risk incurred by the lender in extending credit;
(b) The absence of collateral other than the instrument executed by the consumer payable to the lender;
(c) The relation between the amount and terms of credit granted and the cost of making the loan.

(2) A lender shall require a consumer to fill out a loan application at least once in each twelve-month period of time and shall maintain this application on file. The application shall be signed and dated by the consumer.

(3)

(a) A lender shall require the consumer to provide a pay stub or other evidence of income at least once each twelve-month period. Such evidence shall not be over forty-five days old when presented. If a lender requires a consumer to present a bank statement to secure a loan, the lender shall allow the consumer to delete from the statement the information regarding to whom the debits listed on the statement were payable.
(b) If the amount borrowed is not more than twenty-five percent of the consumer's monthly gross income and benefits, as evidenced by a paycheck stub or otherwise substantiated, a lender shall not be obligated to investigate the consumer's continued debt position, and the consumer's ability to repay the loan need not be further demonstrated.

(4) If a lender complies with the requirements of subsections (2) and (3) of this section, and the deferred deposit loan otherwise complies with this article and other applicable law, neither the consumer's inability to repay the loan nor the lender's decision to obtain or not obtain additional information concerning the consumer's creditworthiness shall be cause to determine that a loan is unconscionable.

Section 5-3.1-123. Use of multiple agreements for deferred deposit loans.

If a consumer obtains a deferred deposit loan voluntarily and separately from his or her spouse and the consumer's action is documented in writing, signed by the consumer, and retained by the lender, the transaction shall not be considered a violation of section 5-3-205.

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