Colorado § 5-2-214 - Alternative charges for loans not exceeding one thousand dollars.

§ 5-2-214. Alternative charges for loans not exceeding one thousand dollars.

(1) For a consumer loan where the amount financed is not more than one thousand dollars, a supervised lender may charge, in lieu of the loan finance charges permitted by section 5-2-201, the following finance charges:

(a) An acquisition charge for making the original loan or any refinanced loan, not to exceed eight percent of the amount financed; and

(b) A monthly installment account handling charge, not to exceed the following amounts:

Amount financed

Per month charge

$100.00 - $300

$8.50

$300.01 - $500

$11.50

$500.01 - $750

$14.50

$750.01 - $1,000

$17.50

(2) The minimum term of a loan made pursuant to this section is six months. The maximum term of a loan made pursuant to this section is twelve months. All loans shall be scheduled to be payable in substantially equal installments at equal periodic intervals.

(3) On a loan subject to the alternative charges authorized by this section, no other finance charge or any other charge or fee is permitted except as specifically provided for in this section and except for reasonable attorney fees provided for in section 5-5-112 and the fee for a dishonored check provided for in section 5-2-202 (1)(e)(II).

(4) Repealed.

(5) Upon prepayment of a loan made pursuant to this section, the unearned portion of the acquisition charge and the total monthly installment handling charge shall be refunded to the consumer. The unearned portion of these charges shall be calculated pursuant to the provisions on rebate upon prepayment contained in section 5-2-211 on the date of refinancing; except that, for the purpose of computing this amount, a minimum finance charge described in section 5-2-201 of no more than ten dollars is allowed if contracted with the consumer in the loan agreement.

(5.5) (a) A lender shall require a consumer to fill out a loan application for every loan under this section and shall maintain the application on file. The application must be signed and dated by the consumer.

(b) A lender shall require the consumer to provide a pay stub or other evidence of income in every application for a loan under this section and shall maintain this application on file. The pay stub or other evidence of income must have been issued or dated within forty-five days before the date of the application. If a lender requires a consumer to present a bank statement to secure a loan, the lender shall allow the consumer to delete from the statement the information regarding to whom the debits listed on the statement were payable. If the amount borrowed is not more than twenty-five percent of the consumer's monthly gross income and benefits, as evidenced by a paycheck stub or otherwise substantiated, a lender is not obligated to investigate the consumer's continued debt position, and the consumer's ability to repay the loan need not be further demonstrated.

(c) If a lender complies with the requirements of subsections (5.5)(a) and (5.5)(b) of this section, and the loan otherwise complies with this article 2 and other applicable law, neither the consumer's inability to repay the loan nor the lender's decision to obtain or not obtain additional information concerning the consumer's creditworthiness is cause to determine that a loan is unconscionable.

(6) The rates and charges permitted by this section shall not apply to deferred deposit loans subject to article 3.1 of this title.

(7) A lender shall not take collateral from a consumer as security for payment for any loan made pursuant to this section.

(8) A lender may not refinance a loan made pursuant to this section more than once in one year.

Source: L. 2004: Entire section added, p. 589, § 1, effective August 4. L. 2007: (1)(a) and (5) amended and (1)(a.5), (7), and (8) added, p. 711, §§ 1, 2, effective August 3. L. 2023: (1), (2), (3), (5), and (8) amended and (5.5) added, (HB 23-1229), ch. 375, p. 2243, § 2, effective January 1, 2024; (4)(b) added by revision, (HB 23-1229), ch. 375, pp. 2243, 2245, §§ 2, 6.

Editor's note: Subsection (4)(b) provided for the repeal of subsection (4), effective January 1, 2024. (See L. 2023, pp. 2243, 2245.)

PART 3

SUPERVISED LOANS AND SUPERVISED LENDERS