Six years after Colorado enacted a payday law reform bill in 2010, payday lenders in Colorado continue to trap their customers in long‐term, high‐cost debt. The promises of a quick‐and‐easy cash infusion draw consumers in, and the rapidly mounting costs keep them from getting out. This report uses data published by the Colorado Attorney General’s Consumer Credit Unit (Demographical and Statistical report, 2016), other prior reports by the Center for Responsible Lending (CRL), and a recent CRL report on the disproportionate impact of payday lending on communities of color in Colorado. The Center for Responsible Lending’s analysis finds:
- The average customer pays $367.29 to borrow $394.77, paying in interest and fees almost the same amount as the principal borrowed.
- Long‐term debt is driven by back‐to‐back transactions where the customer pays back the loan and re‐borrows the same day – accounting for 40% of payday lending in 2015.
- The average customer spends 299 days in debt by taking an average of 3.3 loans in a 12‐month period.
- Payday lenders target communities of color. Majority‐minority neighborhoods are twice as likely to have a payday lending store in their community as in all other areas, and seven times more likely to have a store than white neighborhoods.