In a session that’s supposed to be about protecting the middle class, Senate Bill 16-185 (Consumer Finance Charges Inflation Adjustment) would do exactly the opposite by raising the interest rates on what are called supervised consumer loans. Raising rate caps would lead to more high-cost and unaffordable credit products, hurting consumers and middle-class families.
Other than increasing profits for the out-of-state hedge fund that dominates Colorado’s market, there is no justification for this bill (nor was there last year, when the governor vetoed a similar bill). Colorado consumers and hard-working families who depend on these types of loans deserve better.
Facts about SB16-185
1) SB185 will significantly increase the cost for a typical loan. It will cost Coloradans $9.5 million in additional interest.
2) Lenders are already profitable. One of the major loan companies operating in Colorado reported a 28% increase in earnings in 2015.
3) The number of these loans and the amount loaned are the highest since 2009 and continue to increase. Turmoil in the financial service industry, not a lack of borrowers, has caused consolidation.
4) Borrowers will not be forced to take out payday loans without this bill. Consumer credit loans and payday loans are different products and cannot be substituted. The average consumer credit loan in Colorado is $6,000. The maximum payday loan is $500.
5) In 2015, the Colorado Attorney General's Office testified there's no indication that this credit product is not available or that consumers cannot get access to it.
6) Just like last year, the proponents of the bill are trying to get a late bill through at the end of the session making it difficult for average Coloradans to understand and voice their concerns.
Groups Opposing SB16-185
Bell Policy Center
Center for Responsible Lending
Colorado Catholic Conference
Colorado Center for Law and Policy
Colorado Council of Churches
Colorado Fiscal Institute
Gary Community Investments, Company
Interfaith Alliance of Colorado
Small Business Majority