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AFSA on Colorado’s HB 1148

AFSA on Colorado’s HB 1148

This week, AFSA’s State Government Affairs team sent a comment letter to the Colorado General Assembly regarding its HB 1148 on consumer lending laws.

In the letter AFSA raises concerns that if passed as drafted the bill will worsen access to affordable credit in Colorado and result in extensive adverse socio-economic outcomes. More than a million Coloradans facing challenges in obtaining loans from traditional financial institutions due to their credit scores will discover a lack of alternatives for obtaining the necessary credit to manage their finances, address emergencies, and build credit scores for financial mobility.

The letter dives into a similar law passed in Illinois, where 368,916 borrowers lost access to credit, the number of licensed lenders in the state halved, and the eligible few had to take larger, longer-term loans. The Military-style APR (MAPR) limits, if not eradicates, small-dollar credit in states where they are enforced, particularly affecting individuals with emerging credit scores who are not yet eligible for bank credit.

AFSA also cites various organizations that recognize the significance of traditional installment lending and the potential harm caused by MAPR laws, such as NBCSL, the Congressional Black Caucus Institute, and the Urban Institute.

The letter requests that if Colorado holds concerns about products like credit insurance, debt cancellation contracts, debt suspension agreements, credit-related ancillary products, and/or other benefits considered in HB1148, Colorado should open proponents of this legislation to create discussion about those concerns, instead of essentially prohibiting them by incorporating them into the “rate” calculation.

This letter, along with SGA’s other recent letters, can be found on the direct advocacy section of AFSA’s website.

February 29th, 2024

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