Colorado Online Loans
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Online loans are a preferred alternative to the conventional walk-into-bank models. A recent study reveals that online lenders account for 32.2% of the loans lent to Americans. These numbers are on an exponential rise, especially with the rapid growth in financial tech solutions and the growing population of smartphone owners in the United States and the world.
With this positive trajectory, there comes a need for proper regulations at the state and federal levels to protect consumers from unscrupulous online dealers. The residents of Colorado have access to various types of online loans. Here is what you should know before applying for an online loan in this jurisdiction.
Are Online Loans Legal in Colorado?
A straightforward answer to this question is: Yes. The state of Colorado allows consumers to enjoy the services of online lenders. However, operating an unlicensed online lending company in Colorado is illegal.
The Colorado Department of Regulatory Agencies regulates all commercial banks, trust companies, and other financial institutions within this jurisdiction. The agency categorizes these financial companies into three categories, namely:
- Colorado State-Chartered Credit Union or State-chartered savings & loan association.
- Federally-chartered savings and loans.
- Federally-chartered credit union.
- Lifecare Institution
The Colorado Institution does not charter any institution that does not fall under either of these categories. The Regulatory agency also avails various platforms or channels for consumers to file a complaint against any financial institution.
What are the Most Popular Online Loans in Colorado?
Online lenders tailor their products or packages to fit different types of consumers. Therefore, Looking for an online lender that fits your needs is vital. The following are some easy-access loans for online consumers:
- Personal Loans - These loans are extensive as consumers have varying needs. Most online platforms offer smaller amounts than traditional financial institutions; thus, they are ideal for emergencies.
- Payday loans - These loans are short-term and are typically high-interest loans offered to salaried consumers. A payday loan is often repaid in a single installment directly from the borrower's paycheck.
- Pawnshop loans - These loans are also short-term but secured loans whereby the consumer offers something valuable like jewelry or some other valuable personal asset as collateral for a loan amount.
- Car title loans - Also known as auto loans, are secured loans issued to the consumer in exchange for their vehicle's logbook or another necessary document. Most auto loan providers operate partially online.
What are the terms for Online Payday Loans in Colorado?
While several states in the United states prohibit payday loans, Colorado has found reasonable workarounds to accommodate online payday lenders. In 2010, the state government passed strict regulations to protect consumers from rogue online payday loan providers.
The state outlawed the renewal of a loan more than once and restricted the repayment period to a maximum of six months. It also allowed installment loans and cash advances to online lenders akin to their storefront counterparts.
Here is a summary of regulations for online payday loans in Colorado:
- Consumers can borrow a maximum payday loan amount of $500. The limit can be attained through one or more payday loans.
- Up to 20% maximum in fees for loan amounts of $300 and below, and an additional $7.50 charge for every $100 above the $300.
- Lenders can charge 45% interest for payday loan renewals.
- Online lenders can design their repayment plans and terms, which often differ from one lender to the other.
- Collection of outstanding debts is prohibited.
What are the benefits of Online Colorado Loans?
Online loans inherently adopt the core benefit of technology convenience. Here are the primary benefits of online loans:
- Flexibility - You can apply for an online loan anytime in Colorado. The online loan apps also offer flexible repayment plans, others allowing consumers to negotiate the terms.
- Little to Zero Paperwork - Online lenders do not require rigorous processes to fulfill loans.
- Easy Access to Unsecured Loans - Most online lenders do not ask for collateral, thus making the process relatively straightforward.
- Faster Credit-Limit Growth - On-time payment typically guarantees a higher maximum for borrowers.
- No credit checks - Online lending platforms may not perform credit checks and have alternative ways of checking for consumers' creditworthiness without affecting their credit scores.
These benefits make online loans attractive and generally accessible to more people than traditional storefront loans.
Things to Consider Before Applying for an Online Loan in Colorado
The online space has opened countless opportunities for consumers and financial institutions. Nevertheless, there are several things to remember before submitting your details to any online loan app. While there are various benefits, consider the following factors.
- Run a thorough background check on online lenders - Numerous online lending applications exist. However, some are used as bait to ignorant consumers and harbor scammers and fraudsters. It is vital to check for the lender's credibility by looking them up with the Better Business Bureau and the Consumer Financial Protection Bureau.
- Compare Interest rates from different providers - Always look for the best deals before settling on a lender. While online loans are often expensive, interest rates vary.
- Read through their terms before submitting personal information - Before agreeing to the lender's terms and conditions, look for hidden information to avoid getting trapped in unreasonable fees.
- Only Borrow What You Can Afford - Online loans can be tempting, and taking out more than you need is pretty straightforward. However, that means higher charges which may affect your financial health.
There is a thin line between healthy borrowing and a debt call that is easy to cross with online loans. Fortunately, the state of Colorado has established prudent measures to control borrowing. Regardless, it comes down to developing an unwavering financial discipline that helps you borrow responsibly, even without supervision. The information above is helpful for everyone intending to get an online loan in Colorado.