Sen. Chris Romer (D-Denver) and Rep. Mark Ferrandino (D-Denver) will introduce legislation Monday to refer a measure for the November ballot. The referendum will cap interest on payday loans at 36 percent.
"The average rate is 318 percent with a maximum allowable rate of 521 percent interest," Ferrandino said. "This is a debt trap."
However, payday loan store owners say this limit would ruin their businesses. Ron Rockvam, President of the Payday Advance Association, says the average fee on a $100 loan is $15, but this referendum would lower fees almost nothing.
"There is no chance that anybody could make a living and survive on 9 cents a day on a $100 loan," Rockvam said. "It just doesn't work that way."
Rockvam also insists that payday loans can be much cheaper than bouncing a check or an overdraft fee on a bank account.
Legislators have tried in previous sessions to pass this regulation legislation without success, so this year Romer and Ferrandino want voters to decide.
"Let's let the public understand this. The public understands a fair bargain. Let's let the public decide in November," Romer said.
(KUSA-TV © 2010 Multimedia Holdings Corporation)