Proposition 111: The 36% Cap
In 2018, Colorado voters approved Proposition 111, capping deferred deposit (payday) loans at 36% APR and requiring a minimum repayment term of six months — a sharp change from the short, single-payment structure typical of payday loans elsewhere. The cap took effect February 1, 2019, and applies to all deferred deposit transactions in the state.
Closing the Workaround
After Prop 111 passed, some lenders began offering "alternative charge loans" structured to sidestep the new cap. Colorado's House Bill 23-1229, passed in 2023, closed that loophole, reinforcing that the 36% ceiling applies regardless of what a lender calls the product.
Loan Size and Term
Under current rules, a deferred deposit loan in Colorado is capped at $500 outstanding at any time, with a repayment term of six months or more — borrowers can take multiple loans, but the total outstanding balance can't exceed that $500 ceiling.
| Factor | Colorado Rule |
|---|---|
| APR cap | 36% |
| Minimum term | 6 months |
| Maximum outstanding balance | $500 |
| Loophole closure | HB 23-1229 (2023) |
Because Colorado now regulates this as a longer-term, lower-cost product than a traditional payday loan, comparing total repayment cost over the six-month minimum matters more than comparing a single due-date payoff.
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