First Regular Session
Seventy-fourth General Assembly
STATE OF COLORADO
INTRODUCED
LLS NO. 23-0766.01 Josh Schultz x5486
HOUSE BILL 23-1229
House Committees Senate Committees
Finance
A BILL FOR AN ACT
C
ONCERNING CHANGES TO CONSUM ER LENDING LAWS TO LIMIT101
CHARGES TO CONSUMERS .102
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov
.)
The bill amends the Colorado "Uniform Consumer Credit Code"
to change the terms and interest rates that a lender may charge in a
consumer credit transaction.
The bill amends the calculation of the total amount of the finance
charge that a supervised lender or seller may contract for and receive to
include the total cost of specific additional charges in connection with a
HOUSE SPONSORSHIP
Weissman and Mabrey, Amabile, Bacon, Boesenecker, Brown, deGruy Kennedy, Epps,
Froelich, Garcia, Gonzales-Gutierrez, Jodeh, Joseph, Kipp, Lieder, Lindstedt, Michaelson
Jenet, Ortiz, Parenti, Sharbini, Sirota, Story, Titone, Velasco, Vigil, Willford, Woodrow,
Young
SENATE SPONSORSHIP
Gonzales, Fields
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law. consumer credit transaction.
The bill modifies the requirements for alternative charges for loans
not exceeding $1,000 as follows:
! Reduces the permissible acquisition charge on the original
loan or any refinanced loan to 5% of the amount financed;
! Reduces the permissible amount for a monthly installment
account handling charge;
! Increases the minimum loan term;
! Eliminates delinquency charges for the loan;
! Amends the conditions upon which an acquisition charge
must be refunded to the consumer;
! Details the requirements for an application for the loan and
specifies how the loan application requirements impact a
determination of unconscionability of the loan; and
! Limits the number of times a lender may refinance a
consumer loan to once in a year.
The bill also opts Colorado out of the amendments to the "Federal
Deposit Insurance Act", the federal "National Housing Act", and the
"Federal Credit Union Act" and specifies that rates established in the
Colorado "Uniform Consumer Credit Code" apply to consumer credit
transactions in this state.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, 5-2-201, amend (2)2
and (3)(a); and add (3.5) as follows:3
5-2-201. Finance charge for consumer credit transactions.4
(2) With respect to a supervised loan or a consumer credit sale, except5
for a loan or sale pursuant to a revolving account, a supervised lender or6
seller may contract for and receive a finance charge. T
HE AMOUNT OF THE7
FINANCE CHARGE, calculated according to the actuarial method, MUST not8
exceeding
EXCEED the equivalent of the greater of either of the following:9
(a) The total of:10
(I) A
N AMOUNT EQUAL TO thirty-six percent per year on that part11
of the unpaid balances of the amount financed that is one thousand dollars12
or less,
MINUS THE TOTAL COST OF ALL ADDITIONAL CHARGES LISTED IN13
HB23-1229-2- SUBSECTION (3.5) OF THIS SECTION;1
(II) A
N AMOUNT EQUAL TO twenty-one percent per year on that2
part of the unpaid balances of the amount financed that is more than one3
thousand dollars but does not exceed three thousand dollars,
MINUS THE4
TOTAL COST OF ALL ADDITIONAL CHARGES LISTED IN SUBSECTION (3.5) OF5
THIS SECTION; and6
(III) A
N AMOUNT EQUAL TO fifteen percent per year on that part7
of the unpaid balances of the amount financed that is more than three8
thousand dollars,
MINUS THE TOTAL COST OF ALL ADDITIONAL CHARGES9
LISTED IN SUBSECTION (3.5) OF THIS SECTION; or10
(b) A
N AMOUNT EQUAL TO twenty-one percent per year on the11
unpaid balances of the amount financed,
MINUS THE TOTAL COST OF ALL12
ADDITIONAL CHARGES LISTED IN SUBSECTION (3.5) OF THIS SECTION.13
(3) (a) Except as provided in paragraph (b) of this subsection (3)
14
SUBSECTION (3)(b) OF THIS SECTION, the TOTAL AMOUNT OF THE finance15
charge for a supervised loan or consumer credit sale pursuant to a16
revolving credit account, calculated according to the actuarial method,17
may not exceed twenty-one percent per year on the unpaid balance of the18
amount financed,
MINUS THE TOTAL COST OF ALL ADDITIONAL CHARGES19
LISTED IN SUBSECTION (3.5) OF THIS SECTION.20
(3.5) I
F A SUPERVISED LENDER OR SELLER CONTRACTS FOR ANY OF21
THE FOLLOWING CHARGES, THE TOTAL AMOUNT OF ALL OF THE CHARGES22
MUST BE INCLUDED IN THE CALCULATION OF THE FINANCE CHARGE23
PURSUANT TO SUBSECTION (2) OR (3) OF THIS SECTION:24
(a) A
NY CREDIT INSURANCE PREMIUM OR FEE , ANY CHARGE FOR25
SINGLE PREMIUM CREDIT INSURANCE, ANY FEE FOR A DEBT CANCELLATION26
CONTRACT, OR ANY FEE FOR A DEBT SUSPENSION AGREEMENT ;27
HB23-1229
-3- (b) ANY OTHER CHARGES FOR INSURANCE LISTED IN SECTION1
5-2-202 (1)(b)
AND (3);2
(c) A
NY FEE FOR A CREDIT-RELATED ANCILLARY PRODUCT SOLD IN3
CONNECTION WITH THE CREDIT TRANSACTION ;4
(d) A
NY APPLICATION FEE CHARGED TO A CONSUMER WHO APPLIES5
FOR CONSUMER CREDIT; AND6
(e) C
HARGES FOR OTHER BENEFITS CONFERRED ON THE CONSUMER7
AS DESCRIBED IN SECTION 5-2-202 (1)(d).8
SECTION 2. In Colorado Revised Statutes, 5-2-202, amend (1)9
introductory portion as follows:10
5-2-202. Additional charges. (1) S
UBJECT TO THE PROVISIONS OF11
SECTION 5-2-201 (3.5), in addition to the finance charge permitted by this12
article
ARTICLE 2 and in a consumer lease, a creditor may contract for and13
receive the following additional charges in connection with a consumer14
credit transaction:15
SECTION 3. In Colorado Revised Statutes, 5-2-214, amend (1),16
(2), (3), (5), and (8); repeal (4); and add (5.5) as follows:17
5-2-214. Alternative charges for loans not exceeding one18
thousand dollars. (1) For a consumer loan where the amount financed19
is not more than one thousand dollars, a supervised lender may charge, in20
lieu of the loan finance charges permitted by section 5-2-201, the21
following finance charges:22
(a) An acquisition charge for making the original loan
OR ANY23
REFINANCED LOAN, not to exceed ten
FIVE percent of the amount financed;24
AND25
(a.5) An acquisition charge for making any refinanced loan, not26
to exceed seven and one-half percent of the amount financed; and27
HB23-1229
-4- (b) A monthly installment account handling charge, not to exceed1
the following amounts:2
Amount financed Per month charge3
$100.00 - $300 $12.50 $3.00 4
$300.01 - $500 $15.00 $6.00 5
$500.01 - $750 $17.50 $9.00 6
$750.01 - $1,000 $20.00 $12.00 7
(2) The minimum term of a loan made pursuant to this section8
shall be ninety days IS SIX MONTHS. The maximum term of a loan made9
pursuant to this section shall be IS twelve months. All loans shall be10
scheduled to be payable in substantially equal installments at equal11
periodic intervals.12
(3) On a loan subject to the alternative charges authorized by this13
section, no other finance charge or any other charge or fee is permitted14
except as specifically provided for in this section and except for the15
delinquency charges provided for in section 5-2-203, reasonable attorney16
fees provided for in section 5-5-112 and the fee for a dishonored check17
provided for in section 5-2-202 (1)(e)(II).18
(4) The acquisition charge authorized in this section shall be fully19
earned at the time the loan is made and shall not be subject to refund;20
except that, if the loan is prepaid in full, refinanced, or consolidated21
within the first sixty days, the first ten dollars of the acquisition charge22
shall be retained by the lender and the remainder of the acquisition charge23
shall be refunded at a rate of one-sixtieth of the remainder of the24
acquisition charge per day, beginning on the day after the date of the25
prepayment, refinancing, or consolidation and ending on the sixtieth day26
after the loan was made.27
HB23-1229
-5- (5) Upon the prepayment of a loan made pursuant to this section,1
the unearned portion of the installment account ACQUISITION CHARGE AND2
THE TOTAL MONTHLY INSTALLMENT handling charge shall be refunded to3
the consumer. The unearned portion of the installment account handling4
charge that is refunded THESE CHARGES shall be calculated pursuant to the5
provisions on rebate upon prepayment contained in section 5-2-211 on the6
date of refinancing; except that, for the purpose of computing this7
amount, no A minimum FINANCE charge described in section 5-2-2018
shall be OF NO MORE THAN TEN DOLLARS IS allowed IF CONTRACTED WITH9
THE CONSUMER IN THE LOAN AGREEMENT .10
(5.5) (a) A
LENDER SHALL REQUIRE A CONSUMER TO FILL OUT A11
LOAN APPLICATION FOR EVERY LOAN UNDER THIS SECTION AND SHALL12
MAINTAIN THE APPLICATION ON FILE. THE APPLICATION MUST BE SIGNED13
AND DATED BY THE CONSUMER .14
(b) A
LENDER SHALL REQUIRE THE CONSUMER TO PROVIDE A PAY15
STUB OR OTHER EVIDENCE OF INCOME IN EVERY APPLICATION FOR A LOAN16
UNDER THIS SECTION AND SHALL MAINTAIN THIS APPLICATION ON FILE .17
T
HE PAY STUB OR OTHER EVIDENCE OF INCOME MUST HAVE BEEN ISSUED18
OR DATED WITHIN FORTY -FIVE DAYS BEFORE THE DATE OF THE19
APPLICATION. IF A LENDER REQUIRES A CONSUMER TO PRESENT A BANK20
STATEMENT TO SECURE A LOAN , THE LENDER SHALL ALLOW THE21
CONSUMER TO DELETE FROM THE STATEMENT THE INFORMATION22
REGARDING TO WHOM THE DEBITS LISTED ON THE STATEMENT WERE23
PAYABLE. IF THE AMOUNT BORROWED IS NOT MORE THAN TWENTY -FIVE24
PERCENT OF THE CONSUMER'S MONTHLY GROSS INCOME AND BENEFITS , AS25
EVIDENCED BY A PAYCHECK STUB OR OTHERWISE SUBSTANTIATED , A26
LENDER IS NOT OBLIGATED TO INVESTIGATE THE CONSUMER 'S CONTINUED27
HB23-1229
-6- DEBT POSITION, AND THE CONSUMER'S ABILITY TO REPAY THE LOAN NEED1
NOT BE FURTHER DEMONSTRATED .2
(c) I
F A LENDER COMPLIES WITH THE REQUIREMENTS OF3
SUBSECTIONS (5.5)(a) AND (5.5)(b) OF THIS SECTION, AND THE LOAN4
OTHERWISE COMPLIES WITH THIS ARTICLE 2 AND OTHER APPLICABLE LAW,5
NEITHER THE CONSUMER 'S INABILITY TO REPAY THE LOAN NOR THE6
LENDER'S DECISION TO OBTAIN OR NOT OBTAIN ADDITIONAL INFORMATION7
CONCERNING THE CONSUMER 'S CREDITWORTHINESS SHALL BE CAUSE TO8
DETERMINE THAT A LOAN IS UNCONSCIONABLE .9
(8) A lender may not refinance a loan made pursuant to this10
section more than three times
ONCE in one year.11
SECTION 4. In Colorado Revised Statutes, add 5-13-106 as12
follows:13
5-13-106. Other loans - legislative declaration. I
N ACCORDANCE14
WITH SECTION 525 OF THE FEDERAL "DEPOSITORY INSTITUTIONS15
D
EREGULATION AND MONETARY CONTROL ACT OF 1980", PUB.L. 96-221,16
THE GENERAL ASSEMBLY DECLARES THAT THE AMENDMENTS TO THE17
"F
EDERAL DEPOSIT INSURANCE ACT", 12 U.S.C. SEC. 1811 ET SEQ.; THE18
FEDERAL "NATIONAL HOUSING ACT", 12 U.S.C. SEC. 1701 ET SEQ.; AND19
THE "FEDERAL CREDIT UNION ACT", 12 U.S.C. SEC. 1757, MADE BY20
SECTIONS 521 TO 523 OF THE FEDERAL "DEPOSITORY INSTITUTIONS21
D
EREGULATION AND MONETARY CONTROL ACT OF 1980", PUB.L. 96-221,22
PRESCRIBING INTEREST RATES AND PREEMPTING STATE INTEREST RATES23
DO NOT APPLY TO CONSUMER CREDIT TRANSACTIONS IN THIS STATE . THE24
RATES ESTABLISHED IN ARTICLES 1 TO 9 OF THIS TITLE 5 CONTROL25
CONSUMER CREDIT TRANSACTIONS IN THIS STATE .26
SECTION 5. Act subject to petition - effective date -27
HB23-1229
-7- applicability. (1) This act takes effect September 1, 2023; except that,1
if a referendum petition is filed pursuant to section 1 (3) of article V of2
the state constitution against this act or an item, section, or part of this act3
within the ninety-day period after final adjournment of the general4
assembly, then the act, item, section, or part will not take effect unless5
approved by the people at the general election to be held in November6
2024 and, in such case, will take effect on the date of the official7
declaration of the vote thereon by the governor.8
(2) This act applies to loans made or renewed on or after the9
applicable effective date of this act.10
HB23-1229
-8-