HB 23-1229

HB 23-1229 is a Colorado law that changes how small loans (up to $1,000) are handled starting January 1, 2024. It reduces the fees lenders can charge for these loans and refinancing, extends the minimum loan period from 90 days to six months, and removes penalties for late payments. The law also limits how many times a lender can refinance a loan within a year and adjusts when and how refundable charges are calculated. Additionally, starting July 1, 2024, it exempts certain credit cards from state-imposed finance charge limits. This bill has been signed into law by the governor and will begin to take effect in phases starting June 5, 2023, with full implementation dates set for January 1, 2024, and July 1, 2024.

Official Summary

For consumer credit transactions made or renewed on or after January 1, 2024, the act modifies the requirements for alternative charges for loans not exceeding $1,000 as follows: Reduces the permissible acquisition charge on the original loan from 10% to 8% of the amount financed and increases the permissible acquistion charge on any refinanced loan from 7.5% to 8%; Reduces the permissible amount for a monthly installment account handling charge; Increases the minimum loan term from 90 days to 6 months; Eliminates delinquency charges for the loan; Amends the conditions upon which an acquisition charge must be refunded to the consumer by eliminating the 60-day deadline for prepaying in full, refinancing, or consolidating a loan and changes how the unearned portions of the acquisition charge and monthly installment handling charges are calculated; 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 Decreases the number of times a lender may refinance a consumer loan from 3 times in a year to once in a year. For consumer credit transactions made or renewed on or after July 1, 2024, the act: 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 Act" apply to consumer credit transactions in this state; and Repeals provisions specifying that lender or seller credit cards issued by a credit card bank or financial institution are subject to limitations on finance charges in statute and instead specifies that genera-purpose credit cards are not subject to limits on finance charges and fees applicable to consumer credit transactions specified in state law. APPROVED by Governor June 5, 2023 PORTIONS EFFECTIVE June 5, 2023 PORTIONS EFFECTIVE July 1, 2024 PORTIONS EFFECTIVE January 1, 2024(Note: This summary applies to this bill as enacted.)

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