DENVER Payday lenders would be able to keep more fees from their customers under a bill the House passed Thursday.
The high-interest lenders fought hard last year against new regulations on their industry, which lowered interest rates and took the minimum term of a loan to six months, up from a typical two weeks, to give borrowers more time to pay off their debts.
House Bill 1290 allows the lenders to keep their full up-front fees of up to $75, no matter how quickly a borrower pays back a loan. Last summer, the Attorney Generals office wrote rules to make the fees partially refundable if borrowers pay back their loans quickly.
HB 1290 passed 36-27, with support from every Republican present and four Democrats.
Theres a lot of good folks ... that want to be able to use these types of loans. Its a fair, legitimate, legal business, said the sponsor, Rep. Larry Liston, R-Colorado Springs.
Supporters and opponents differed on the effect the bill would have on borrowers. Liston said a nonrefundable fee will be a disincentive to take out multiple loans.
But opponents said that letting the lenders keep the fee will give them an incentive to steer borrowers into a quick payback of loans, which can trap people in a cycle of debt.
Rep. Roger Wilson, D-Garfield County, drew hisses for his condemnation of the industry.
Were talking about the most vulnerable people in our society, people that are struggling to make ends meet and people that are very desperate, Wilson said. Im surprised this bill doesnt have something in it about breaking their knees if they dont pay off their loan in time.
Liston blamed last years change for the closure of 140 payday loan stores. His Democratic opponents suggested the store closures had more to do with a saturated market by last year, they outnumbered McDonalds and Starbucks coffee shops combined.
The bill now goes to the Senate, where the sponsor is Boulder Democrat Rollie Heath. Heath helped author a last-minute rewrite of last years bill that created the current regulations.
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