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Guide to Payday loans in Colorado United States
Payday loans are meant to provide short term liquidity solutions to the people who face any kind of financial difficulties. It abridges the gap between the two pay cycles and helps the borrower to handle any financial difficulty during this time. Some situations cannot wait until the next pay date and demand an immediate money flow to curtail it. With the shortest turnaround and easy application process, this product has become immensely popular with the people and the count has been growing steadily. Using this product, a person can borrow any sum from $100 to $1000 (depending on the state you are taking loan in).
Some of Payday loans in Colorado qualifying criteria is :
- Applicant to have a steady income which should be over $1000 monthly
- Applicant must be in a legal job and with the current employer for more than 90 days
- Applicant should be a legitimate resident of the United States and must possess authorized residence address proof.
- Applicant should be above 18 years of age making him eligible to enter into a financial contract
- Applicant must not be a declared bankrupt and should not be defaulting currently with any other lender. This is usually checked by looking at the credit report of the applicant. Though not a great weight-age is put on the credit history, it’s a done only to check if the applicant is not having any current defaulting situation.
Payday lenders are known to charge huge percentage of interest and create unfavorable agreements on these deals. To minimize such type of bizarre rates, payday loans in Colorado are governed by the laws under the “Deferred Deposit Loan Act”.
Some of the provisions under this act which regulates the terms of payday loans are:
- The maximum loan amount will be $500
- The minimum length of the loan is 6 months
- There is no cap on the maximum length of the loan
- The maximum rate of interest for a $300 payday loan is 20%
- The maximum charge on a payday loan over $300 will be and extra $7.5 per extra $100 borrowed up to the total loan of $500
There are some collection limits on the payday loans tendered in Colorado. Such limits control the action of all involved lenders and collection agents.
Some of the payday loans limitations are:
- Lenders can collect a maximum sum of $25 as ‘Non-Sufficient funds’ (NSF) fee. In case the borrower defaults on the loan, the loan amount as well as the attorney fee can be recovered under a court trial
- The collection agency is not allowed to take any legal action against the borrower. Only situation where it can be done when the borrower closes its checking account before the repayment was over.
- In case the borrower repays the loan amount before it is due for payment, lender is required to refund the proportionate amount or the annual percentage rate charged.
In case any lender does not comply with any of the above guidelines, the customer can approach the Attorney General of Colorado with the instance of breach. It is important to be aware of the rights and use them at the right time. Payday loans no doubt provide a big time breathing space to a person in need but it is important for the borrower to do an extensive financial planning and manage the money well before opting for such product.