On May 4, PICO faith leaders in Colorado celebrated a major victory in its multi-year effort to fight back predatory payday lending in the state, when the state legislature passed HB 1351, restricting payday lenders from making the sort of short-term loans with sky-high interest rates that have been proven to trap borrowers in a never-ending cycle of debt.

"Despite the desperate and aggressive efforts of the payday lending industry, today, we can celebrate Colorado families have access to emergency cash with a reasonable interest rate and realistic loan term," said Karla Loaiza MOP Board Chair.

PICO affiliate Metro Organizations for People (MOP) and their allies in the Coloradoans for Payday Lending Reform managed to pass legislation through both the Senate and the House that will cap interest rates on payday loans at 45%, down from as high as 400%.  This translates into an average savings of over $600 for a family who gets a six-month loan.

To build support for the legislation, MOP leader Tobias Serrano, a master auto mechanic who understands how devastating payday loans can be from his own personal experience, testified before the Colorado legislature this spring about the need for payday lending reform. With business slow due to the recession, Toby had to take out a $400 payday loan to pay his gas bill.  He was able to keep his family warm, but he ultimately paid $720 over a period of five months to repay the loan. 

"This is landmark reform that will protect Colorado families like my own from toxic loans trapping us in a cycle of debt," said Serrano.

MOP faith leaders also wrote letters urging Colorado lawmakers and local newspapers to stand against usurious and toxic payday loading declaring they have no place in Colorado.

In addition to capping interest rates at 45%, HB 1351 also will set a minimum loan term of six months, to provide borrowers with a more reasonable period for which to repay their loan.  Currently, borrowers are expected to repay their loan in full in two weeks, a near impossibility for cash-strapped working families.   It will also eliminate or reduce the many fees that get tacked onto a borrowers debt, and will allow the borrower to pay back the loan in full at any time without any penalties.

The legislation will now go Governor Bill Ritter's desk for signature.