Colorado Payday Loan Laws, Explained

Last updated: July 20, 2026

By the US Lending Editorial Team · Reviewed for factual accuracy against the federal and state sources cited on this page.

Key takeaway

Key takeaway: Colorado's rate cap didn't come from the legislature first — it came directly from voters, and the state has since gone back and closed the gaps lenders tried to slip through.

Who this is forThis guide is for Colorado residents comparing a payday, cash-advance, or short-term loan, and anyone checking what is legally allowed before they borrow.

When to use itUse it before you accept any offer, so you can compare the total cost across more than one lender.

What this page covers

Proposition 111: The 36% Cap
Closing the Workaround
Loan Size and Term

Proposition 111: The 36% Cap

In 2018, Colorado voters approved Proposition 111, capping deferred deposit (payday) loans at 36% APR and requiring a minimum repayment term of six months — a sharp change from the short, single-payment structure typical of payday loans elsewhere. The cap took effect February 1, 2019, and applies to all deferred deposit transactions in the state.

Closing the Workaround

After Prop 111 passed, some lenders began offering "alternative charge loans" structured to sidestep the new cap. Colorado's House Bill 23-1229, passed in 2023, closed that loophole, reinforcing that the 36% ceiling applies regardless of what a lender calls the product.

Loan Size and Term

Under current rules, a deferred deposit loan in Colorado is capped at $500 outstanding at any time, with a repayment term of six months or more — borrowers can take multiple loans, but the total outstanding balance can't exceed that $500 ceiling.

Factor	Colorado Rule
APR cap	36%
Minimum term	6 months
Maximum outstanding balance	$500
Loophole closure	HB 23-1229 (2023)

Verify current terms with the Colorado Attorney General's Office before applying with any short-term lender.

Because Colorado now regulates this as a longer-term, lower-cost product than a traditional payday loan, comparing total repayment cost over the six-month minimum matters more than comparing a single due-date payoff.

Sources: NCSL — Payday Lending State Statutes · CFPB — Payday Loans

Colorado Payday Loan FAQ

Are payday loans legal in Colorado?

Traditional payday loans are effectively gone. Colorado voters capped all-in costs at 36% APR in 2018, and HB 23-1229 closed remaining loopholes in 2023.

What is the payday loan rate cap in Colorado?

36% APR, with a minimum loan term of 6 months.

How much can you owe on a Colorado payday loan?

The maximum outstanding balance is $500.

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