Colorado Loan Laws: Payday, Title and Installment Rules

Payday lending is legal in Colorado, but under tight limits. Since February 1, 2019, Colorado payday loans (called deferred deposit loans in state law) cannot cost more than 36% APR, including all fees. They are capped at $500 and must run at least six months.

How Colorado got here: two big reforms

Colorado payday loan laws changed twice in a decade. Each change made the product cheaper and slower, and each pushed many storefront lenders out of the state.

The first reform came in 2010 under House Bill 10-1351. It rewrote the Deferred Deposit Loan Act, C.R.S. § 5-3.1-101 et seq. Before then, a Colorado payday loan worked like payday loans in most states: a two-week loan with a single balloon payment. After 2010, every payday loan had to be an installment loan with a minimum term of six months. You could also pay it off early without a penalty.

The second reform came from voters. Proposition 111 passed in November 2018 with more than three-quarters of the vote. It took effect February 1, 2019, and amended C.R.S. § 5-3.1-105 so that the total finance charge on a deferred deposit loan cannot exceed an annual percentage rate of 36%. The earlier law had allowed an origination fee, a monthly maintenance fee and interest stacked on top of each other, which pushed average APRs well above 100%. Proposition 111 replaced that fee stack with one all-in rate cap.

Proposition 111 also made it an unfair or deceptive trade practice for anyone to offer, arrange or help make a payday loan to a Colorado consumer above the cap. That wording matters for online lenders, which we cover below.

Payday and short-term loans in Colorado

The core rules

Here is how the Deferred Deposit Loan Act works today. Each rule has a statutory home, so you can point to it if a lender pushes back.

Rule	What Colorado law says	Where it comes from
Rate cap	36% APR, all finance charges included	C.R.S. § 5-3.1-105 (as amended by Proposition 111, effective Feb. 1, 2019)
Maximum loan	$500 total principal	C.R.S. § 5-3.1-106
Minimum term	Six months	Deferred Deposit Loan Act, C.R.S. § 5-3.1-101 et seq. (2010 amendments)
Prepayment	Allowed, no penalty	Deferred Deposit Loan Act (2010 amendments)
Licensing	Lender must hold a Colorado supervised lender license	Uniform Consumer Credit Code, C.R.S. § 5-2-301
Other fees	No fees beyond the capped finance charge	C.R.S. § 5-3.1-105

Colorado does not use the two-week rollover model you see in other states. Because every loan runs at least six months and pays down in installments, the classic “pay the fee, roll it over” cycle doesn’t exist in the same form. If a lender offers to refinance or “renew” your loan, ask for the new total cost in writing and compare it to what you owe now.

What a Colorado payday loan costs

The 36% cap makes a Colorado payday loan far cheaper than one in a state without a cap. The table compares a $500 loan under Colorado law with a typical two-week payday loan priced at $15 per $100, a common fee in states that allow traditional payday lending.

Loan	Amount	Fee or APR	Term	Payment	Total repaid
Colorado deferred deposit loan	$500	36% APR	6 months	About $92.30 a month	About $553.80
Two-week payday loan (uncapped state)	$500	$75 fee (about 391% APR)	14 days	$575 in one payment	$575
Credit union PAL I	$500	28% APR plus up to $20 fee	6 months	About $90.27 a month	About $561.62 with full fee

How the APR math works in plain words: on the two-week loan, a $75 fee on $500 is 15% for 14 days. There are about 26 two-week periods in a year (365 divided by 14), so 15% times 26.07 comes to roughly 391% a year. On the Colorado loan, 36% a year is 3% a month on the remaining balance. Over six payments that comes to about $53.80 in interest.

The surprise in that table is how close the Colorado payday loan and the credit union option are. A federal credit union payday alternative loan can charge up to 28% APR plus an application fee of up to $20. On a small six-month loan, that fee can make the total cost similar to a capped Colorado payday loan. The credit union option still tends to be safer because federal rules limit how many PALs you can take in a row and credit unions don’t operate on repeat borrowing.

Why fewer payday lenders operate in Colorado

A 36% cap on a $500 loan earns a lender very little, often less than the cost of underwriting and collecting it. After Proposition 111, the number of licensed payday lenders and storefronts in Colorado fell sharply, according to the Attorney General’s annual reports on deferred deposit lending. If you see a lender offering “Colorado payday loans” at triple-digit rates, that offer is either unlicensed or claims an exemption from state law. Treat it as a red flag.

Car title loans in Colorado

Colorado has no statute that authorizes high-rate car title loans of the kind sold in states like Texas or Tennessee. A loan secured by your car title is still a consumer loan under the Uniform Consumer Credit Code (UCCC), C.R.S. Title 5. That means the lender needs a supervised lender license and has to stay inside the UCCC’s rate limits.

Those limits make the typical 300% title loan illegal in Colorado. In practice, the title lending industry has almost no licensed presence in the state. Compare that with Texas payday loan laws, where title lenders operate as credit access businesses and fees are not capped in the same way.

If you do have a loan secured by your car, the UCCC gives you default protections. Under C.R.S. §§ 5-5-110 and 5-5-111, a creditor generally must send a notice of your right to cure a default before it can accelerate the loan or take the collateral, giving you a window to catch up on missed payments. There are exceptions, including repeat defaults, so read any notice carefully and respond before its deadline.

A lender also cannot breach the peace to repossess a vehicle. If someone threatens you, enters a locked garage or takes a car over your objection at the scene, write down what happened and contact the Attorney General’s office.

Installment loans and personal loans in Colorado

Most installment loans in Colorado above payday size are “supervised loans” under the UCCC. Any non-bank company that makes consumer loans with a finance charge above 12% a year must hold a supervised lender license from the Attorney General’s Consumer Credit Unit, under C.R.S. § 5-2-301.

The tiered rate cap

C.R.S. § 5-2-201 sets the maximum finance charge for supervised loans. The statute uses blended tiers based on the unpaid balance:

Portion of the unpaid balance	Maximum annual rate
First $1,000	36%
Over $1,000 up to $3,000	21%
Over $3,000	15%
Alternative single rate on whole balance	21%

A lender may use either the tiered method or the single 21% rate. The code also allows certain limited additional charges, and some dollar figures in the UCCC can be adjusted under the code’s indexing provisions. If a contract looks high, ask the Attorney General’s Consumer Credit Unit to confirm the current figures before you sign.

To see what this means for Colorado installment loans, here is a $1,000 loan at the 36% top tier:

Loan	Amount	APR	Term	Monthly payment	Total repaid
Supervised installment loan	$1,000	36%	12 months	About $100.46	About $1,205.52

That works out to about $205.52 in interest. At 36% a year you pay 3% a month on whatever you still owe, so the interest shrinks each month as the balance drops.

Banks and the 2023 interest rate opt-out

Banks are the big exception. Under federal law, a state-chartered bank in another state has generally been able to “export” its home state’s interest rates to borrowers anywhere. Colorado tried to close that gap with House Bill 23-1229. The law uses Section 525 of the Depository Institutions Deregulation and Monetary Control Act to opt Colorado out of the federal rate preemption in Section 521, so that Colorado’s rate caps would apply to certain loans out-of-state state banks make to Colorado residents, effective July 1, 2024.

Industry trade groups sued. In 2024 a federal district court issued a preliminary injunction limiting the opt-out, and the case went to the U.S. Court of Appeals for the Tenth Circuit. The scope of the opt-out has depended on how that litigation plays out, so check with the Attorney General’s office for its current position before you assume a particular bank loan is or isn’t covered.

Personal loans for bad credit in Colorado

Ads for personal loans for bad credit in Colorado often promise “guaranteed approval” or “no credit check.” Neither phrase describes what really happens. Most lenders run a soft credit pull or use alternative data like bank account history, and borrowers with weak credit get the highest rates the law allows. A licensed lender in Colorado cannot go above the UCCC caps no matter how low your score is. If an offer quotes an APR above 36% on a small loan, ask who the lender is and whether it holds a Colorado license.

“Same day loans” in Colorado are mostly about funding speed, not a separate product. A lender can approve and deposit funds the same day, but the loan still has to follow the same rate caps and licensing rules.

Online and tribal lenders

State law applies to online lenders. Under the UCCC’s territorial rules, a lender that solicits Colorado residents and makes loans to them is generally treated as making those loans in Colorado. It needs a Colorado license and must follow Colorado caps. Proposition 111 added a second layer by targeting anyone who offers or arranges a payday loan above 36% to a Colorado consumer.

Colorado has a long record of enforcing this. In Cash Advance & Preferred Cash Loans v. State (2010), the Colorado Supreme Court dealt with online payday lenders that claimed tribal sovereign immunity. The court held that immunity only protects lenders that are truly arms of a tribe, and that the lender has to prove that relationship. In 2020, the Attorney General settled a “true lender” case involving online lenders Avant and Marlette and their partner banks, WebBank and Cross River Bank. The settlement included rate limits for Colorado loans and refunds for borrowers.

Tribal lenders still advertise online and still argue that Colorado law does not apply to them. You don’t have to settle that legal question to protect yourself. If an online lender is not licensed in Colorado and charges more than the state caps, you have strong reasons to walk away, and you can report it.

Debt collection and wage garnishment limits in Colorado

What Colorado collectors can and cannot do

Debt collectors working in Colorado must follow both the federal Fair Debt Collection Practices Act and the Colorado Fair Debt Collection Practices Act, C.R.S. § 5-16-101 et seq. Colorado requires collection agencies to be licensed through the Colorado Collection Agency Board, which the Attorney General’s office administers.

Under these laws, a collector cannot:

• Threaten arrest, jail or violence over a consumer debt
• Lie about the amount you owe or claim to be an attorney when it is not
• Call at unreasonable hours or keep calling to harass you
• Tell your employer, family or neighbors about your debt, with narrow exceptions
• Keep contacting you after you send a written request to stop, except to confirm it will stop or to tell you about a specific action like a lawsuit

Colorado also passed House Bill 23-1126, which bars medical debt from appearing on Colorado consumer credit reports. If a medical bill shows up on your Colorado report, you can dispute it under the Fair Credit Reporting Act and cite the state law.

Statute of limitations

Collectors have limited time to sue. Under C.R.S. § 13-80-103.5, actions to collect liquidated debts, which include most loans and credit card balances, generally must be filed within six years. Old debt can still be collected by phone or letter, but if you are sued on a debt you think is too old, raise the statute of limitations in your answer. If you don’t respond to the lawsuit at all, the court can enter a default judgment against you even on an old debt.

Wage garnishment and protected money

A collector needs a court judgment before it can garnish your wages for a regular consumer debt like a payday loan or credit card. Colorado limits how much it can take.

Type of debt	Garnishment limit	Source
Consumer debt judgment (payday, credit card, personal loan)	The lesser of 20% of disposable earnings or the amount by which weekly disposable earnings exceed 40 times the applicable minimum wage	C.R.S. § 13-54-104
Federal student loans (administrative)	Up to 15% of disposable pay, no court order needed	20 U.S.C. § 1095a
Child support	Up to 50% to 65% of disposable earnings, depending on circumstances	Consumer Credit Protection Act, 15 U.S.C. § 1673
Federal benefits in a bank account	Two months of directly deposited benefits protected	31 CFR Part 212

Colorado tightened its garnishment rules in 2019 and again with Senate Bill 22-086, which tied the protected floor to the applicable minimum wage where you work. Because Colorado’s minimum wage adjusts every January and some cities like Denver set higher local wages, the dollar amount you keep changes from year to year.

Social Security, SSI and veterans’ benefits are generally exempt from collection by private creditors. Your bank must automatically protect two months of those benefits when they are directly deposited. Colorado also lists other exempt property in C.R.S. § 13-54-102. If money you need to live on gets frozen, ask the court for an exemption hearing quickly. The deadlines are short.

Debt relief in Colorado: what the law requires

Many people searching for debt relief in Colorado find companies that promise to cut what they owe. Colorado regulates these businesses under its version of the Uniform Debt-Management Services Act, C.R.S. § 5-19-201 et seq. Debt management and debt settlement providers that serve Colorado residents must register with the Attorney General’s office. The act limits the fees they can charge and requires written agreements.

Federal law adds another layer. The FTC’s Telemarketing Sales Rule, 16 CFR 310.4(a)(5), bars debt relief companies that sell by phone from collecting fees before they have actually settled or changed at least one of your debts.

Debt settlement carries real costs. Your accounts usually go delinquent while you save, your credit score drops, collectors can still sue you, and forgiven debt over $600 may be reported to the IRS as income. A nonprofit credit counseling agency can review your budget for free or at low cost and may set up a debt management plan that lowers interest rates without stopping payments.

Help that costs less than a loan

Before you borrow, check whether you can cover the gap another way. Several real programs serve Coloradans.

Credit union payday alternative loans. Federal credit unions can offer two types of PALs under NCUA rules at 12 CFR 701.21(c)(7). PAL I loans run $200 to $1,000 for one to six months. PAL II loans go up to $2,000 for one to 12 months. Both are capped at 28% APR, with an application fee of up to $20. Some Colorado state-chartered credit unions offer similar small-dollar products under their own rules.

Energy and utility help. The Low-income Energy Assistance Program (LEAP), run by the Colorado Department of Human Services, helps eligible households pay winter heating costs, with applications open during the heating season. Energy Outreach Colorado, a nonprofit, also funds bill assistance through partner agencies.

Food, cash and health coverage. You can apply for SNAP, Colorado Works (the state’s cash assistance program) and Health First Colorado (Medicaid) through the state’s PEAK online portal or your county human services office.

Housing. Colorado Housing Connects is a statewide helpline for renters and homeowners facing eviction, foreclosure or rent trouble. 2-1-1 Colorado can connect you to local emergency rent and deposit funds, which change throughout the year.

Employer and app advances. Some employers offer paycheck advances at no cost. Earned wage access apps can be cheap if you skip optional tips and instant-transfer fees, but those small fees can add up to high effective APRs when you use them every pay period.

How to check a lender’s license and file a complaint

The Colorado Department of Law, through the Attorney General’s Consumer Credit Unit, licenses payday and installment lenders under the UCCC and the Deferred Deposit Loan Act. The same office oversees collection agency licensing and debt management registrations.

If something goes wrong, you have several places to complain:

• Colorado Attorney General. File a consumer complaint through StopFraudColorado or contact the Consumer Credit Unit directly about an unlicensed lender, illegal fees or a collector.
• CFPB. The Consumer Financial Protection Bureau’s complaint portal forwards your complaint to the company, which generally has 15 days to respond.
• FTC. Report scams and fake lenders to the FTC through ReportFraud.
• FBI IC3. Report online fraud, like advance-fee loan scams that ask for a gift card or wire before “approval.”

A real lender never needs an upfront fee paid by gift card, crypto or wire to release a loan. That request alone tells you it’s a scam.

Federal rules that apply everywhere

Some protections follow you no matter which state you live in.

• Truth in Lending Act and Regulation Z (12 CFR 1026). Lenders must disclose the APR, finance charge, amount financed and total of payments before you sign.
• Military Lending Act (32 CFR Part 232). Active-duty service members and covered dependents cannot be charged more than a 36% Military Annual Percentage Rate on most consumer credit, including payday, title and many installment loans.
• Fair Debt Collection Practices Act and Regulation F (12 CFR 1006). Third-party collectors must send a validation notice and cannot harass, deceive or use unfair practices.
• Equal Credit Opportunity Act. Lenders cannot deny or price credit based on race, sex, marital status, age or receipt of public assistance.

If you have moved from another state, the rules there can be very different. Our pieces on Illinois payday loan laws and Missouri payday loan laws show how widely caps vary across the country.

FAQ

Are payday loans legal in Colorado?

Yes, but only within the Deferred Deposit Loan Act. Since February 1, 2019, the all-in cost is capped at 36% APR under C.R.S. § 5-3.1-105. Loans are limited to $500, must last at least six months, and come only from lenders holding a Colorado supervised lender license.

How much can I borrow on a Colorado payday loan?

The maximum is $500 in total principal under C.R.S. § 5-3.1-106. For a larger amount, you would need a supervised installment loan, which falls under the tiered UCCC rate caps in C.R.S. § 5-2-201, or a credit union loan.

Can an online lender charge me more than 36% in Colorado?

A licensed non-bank lender cannot exceed Colorado’s caps on payday-size loans. Some online and tribal lenders claim state law doesn’t apply to them, and Colorado has fought those claims in court. If an online lender charges more than the caps, check its license with the Attorney General and report it if it isn’t licensed.

Can a payday lender garnish my wages in Colorado?

Not without a court judgment. If a lender sues and wins, it can garnish no more than the lesser of 20% of your disposable earnings or the amount above 40 times the applicable minimum wage, under C.R.S. § 13-54-104. Directly deposited Social Security and other federal benefits are protected under 31 CFR Part 212.

Are car title loans legal in Colorado?

Colorado has no law authorizing high-rate title loans. A lender can take a car title as collateral only if it holds a supervised lender license and stays within UCCC rate caps, which rules out the triple-digit title loans sold in many other states.

Where can I get debt relief in Colorado without paying a big fee?

Start with a nonprofit credit counseling agency, which can review your budget and may offer a debt management plan. Any debt management or settlement company serving Colorado must register with the Attorney General under C.R.S. § 5-19-201 et seq. Debt relief companies that sell by phone cannot charge fees before they settle a debt, under the FTC’s Telemarketing Sales Rule.

Laws and regulations referenced

• Truth in Lending Act, 15 U.S.C. 1601
• Regulation Z, 12 CFR Part 1026
• Fair Debt Collection Practices Act, 15 U.S.C. 1692
• Regulation F (debt collection), 12 CFR Part 1006
• Fair Credit Reporting Act, 15 U.S.C. 1681
• Equal Credit Opportunity Act, 15 U.S.C. 1691
• Military Lending Act, 10 U.S.C. 987
• Military Lending Act rule, 32 CFR Part 232

Links go to the official text on government sites.

Check, verify or complain

• NMLS Consumer Access (state lender licenses)
• CFPB complaint portal
• FTC ReportFraud
• FBI Internet Crime Complaint Center (IC3)

Sources

1. coag.gov › licensing › uniform consumer credit code › sales finance notification fre… coag.gov · primary source
2. ecfr.gov › current › title 12 › chapter VII › subchapter A › part 701 › section 701.21 ecfr.gov · primary source
3. content.leg.colorado.gov › sites › default › files › images › olls › crs2024 title 05.pdf content.leg.colorado.gov · primary source
4. ballotpedia.org › Colorado Proposition 111, Limits on Payday Loan Charges Initiative (2… ballotpedia.org
5. news.ballotpedia.org › 2019 › 01 › 30 › colorado proposition 111 limiting payday loan interest rat… news.ballotpedia.org
6. usfinancecalculators.com › blog › payday loan apr calculator true cost guide usfinancecalculators.com
7. law.justia.com › codes › colorado › title 5 › consumer credit code › article 3 1 › section 5 3 1… law.justia.com
8. gazette.com › 2010 › 06 › 04 › new law targets payday lenders 379981ca cbe7 5dff 92f8 cca… gazette.com

Written byElena RuizStaff writer, money basics and your rights

Elena writes about getting through a money emergency, assistance programs, budgeting on a tight income, banking basics and borrower rights. Her guides list the cheaper options first and link the agency or program that can actually help.

Fact-checked byRuth AdlerStandards Editor

Ruth is US Financer's standards editor. Every article goes through her checks before and after it is published: each rate, fee, cap, deadline and rule is matched against its primary source, every law named is linked to its official text, and anything that cannot be…