(And they’ve stopped spamming us, too – promoted by Colorado Pols)
That’s how much Colorado consumers saved in 2011 thanks to changes in the state’s payday lending law, according to data in a report released Monday by Attorney General John Suthers.
The report shows the impact of the first full year of reforms, which were a major achievement of the 2010 legislative session. A key feature of the reforms is a minimum six-month term for payday loans, which gives borrowers an opportunity to pay them off without rollovers.
According to data in Suthers’ report, consumers saved an average of $223.90 per loan on 444,333 loans, for a total savings of $99.5 million. The report says that about 77 percent of loans were paid in full before their maturity date.
The report also shows that the number of loans dropped almost 60 percent, from 1.1 million in 2010 to 444,333 in 2011; the dollar amount of those loans fell from $409 million to $167 million.
The numbers show that consumers had an easier time of managing the loans. In 2010, about a third of all loans were refinanced or rolled over, resulting in additional fees. In 2011, after the reforms, there were none.
“The attorney general’s report shows that 2010’s reforms are helping hard-working Colorado families. They are saving money, which will help meet basic needs, and this money will stay in the community,” said Rich Jones, the Bell’s director of policy and research, who worked on the reforms as part of Coloradans for Payday Lending Reform.
Here is a comparison of costs and fees after reforms, according to the attorney general, and costs and fees under the previous law:
Actual fees for 2011 (from AG’s report)
Origination fee $40.37
Actual interest $31.56
Monthly maintenance fee $50.84
Total loan costs $122.77
Cost under old law (from AG’s press release)
Number of loans (average 104-day borrowing period) 5.78
Cost per loan (average finance charge) $60
Total loan costs (5.78 x $60) $346.67
Savings under the new law
Savings per loan $223.90
Total payday loans 444,333
Total statewide savings $99,484,678