Colorado Payday & Small-Dollar Loan Laws

Colorado Lending Overview

Colorado voters fundamentally changed the state's lending landscape in 2018 by passing Proposition 111. This measure established a strict 36% interest rate cap on payday loans, a limit that includes all finance charges and origination fees. Under these regulations, short-term loans are restricted to a maximum principal of $500. Additionally, state law requires a minimum repayment term of six months, ensuring borrowers have more time to settle their balances than the two-week cycles permitted in other jurisdictions. This legislation led to a significant reduction in traditional high-cost storefront lending across the state.

Residents seeking immediate capital typically choose between small-dollar payday loans or larger personal installment loans from banks and credit unions. Because the interest rate cap applies broadly, emergency loans in the state function differently than typical high-interest products found elsewhere. Borrowers often use these funds for unexpected medical bills or car repairs, relying on fixed monthly payments over the mandatory six-month period. While personal loans for larger amounts are available through traditional lenders, the 36% cap remains the primary regulatory safeguard for those accessing smaller amounts of short-term credit.