10 Things to Know About Payday Lending

  1. Payday loans are short-term loans for immediate cash, typically secured by a borrower’s written check or authorization for automatic withdrawal from the borrower’s bank account.

  2. Many payday lenders make money by trapping borrowers in a cycle of repeated transactions, where borrowers are forced to pay high fees every two weeks just to keep an existing loan outstanding that they cannot afford to pay off.

  3. Payday lenders are often referred to as “abusive” or “predatory” because they make money off of citizens who are sometimes desperate for cash and feel like they have no other available lending options.

  4. U.S. families pay more than $3.4 billion in fees associated with payday loans every year. This amount does not include fees charged by other companies, for example, a fee charged by a bank for insufficient funds.

  5. Payday lenders are not regulated like banks and credit cards and therefore can charge higher interest rates. Typical annual percentage rates for payday loans average over 300%. These interest rates result from repeated payment of fees to keep the short-term loan balance outstanding, buying more time to pay off the loan.

  6. Payday lenders and check cashers outnumber McDonald’s restaurant and Wal-Mart stores in the United States.

  7. Payday loan borrowers on average receive 8 to 13 payday loans per year.

  8. 91% of all payday loans are made to borrowers with five or more payday loans per year.

  9. In Colorado, a payday lender may charge a 20% fee for the first $300 and 7.5% for any amount over $300. The payday lender can also charge an interest rate of 45% per year for each payday loan made, and may charge a monthly maintenance fee of $7.50 per $100 loaned for each unpaid payday loan. This maintenance fee is applied to loans that are not paid within 30 days from receiving the original loan, but the fee must not exceed $30.00 per month.

  10. In Colorado, if a borrower pays off the payday loan before the loan becomes due, the payday lender must refund a prorated portion of the annual percentage rate.


Life surprises us all and you never know when you will need fast cash. Be informed and protect yourself. Visit these links to the Colorado Attorney General’s website if you would like more information on your rights as a consumer or to file a complaint against a payday lender. 

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