Providing window into problems facing families nationwide, original research about Colorado borrowers shows expensive credit is already burying people in debt, debunking argument for legalizing even costlier credit

DENVER, COLO. – The Center for Responsible Lending (CRL) today released the report “Buried in Debt: High-Cost Credit Products Harm Working Coloradans.” The report’s findings refute a misguided argument often made by some lenders that people would benefit if financial firms could charge interest rates higher than the current limits under state law.

Through new analyses and interviews, this research paper shows that low- to moderate-income Coloradans have numerous credit options under existing usury laws. But the costliest of these loans have not improved their financial circumstances, and in many cases trapped workers in long-term debt. The paper concludes that allowing loans at even higher rates would push debt-burdened borrowers further behind.

“High-priced loans are not the answer for Coloradans already financially strained by high prices of housing and food, and wages that haven’t kept up,” said Candice Wang, senior researcher at CRL and report co-author. “Hiking up the cost of credit ignores that credit in Colorado is widely accessible, and that high-cost loans are already aggravating financial challenges.”

Among the research paper’s findings: 

  • As seen in the most recent data from the Colorado Attorney General, out of over 135,000 supervised loans issued by larger lenders in 2022 and 2023, over half went to subprime borrowers – borrowers with a credit score under 660.
  • Over 20 creditors are listed in the average consumer bankruptcy case in Colorado that was closed in 2023 – a group of over 3,300 cases.
  • Over one in ten of these bankruptcy filings list high-cost lender OneMain as a creditor; this shows the company already tolerates a significant amount of risk in its lending with the current interest rate caps.
  • In focus groups convened for this report, financial counselors unanimously rejected the idea of raising the interest rate cap for loans of $10,000 or larger from its current 21% APR to 36% APR.

Andrea Kuwik, Director of Policy & Research at Denver-based Bell Policy Center, said, “This report is consistent with and complements our research. While high-cost credit is widespread among low-income Coloradans, it can’t close the chasm between households’ income and expenses and, all too often, it widens this gap.”

Danny Katz, executive director at Denver-based CoPIRG, said, “When Colorado voters have been asked, they have shown strong support for stopping predatory lending practices in Colorado. More transparency in the lending space would help everyone from the public to decision makers identify new problems. This report underscores the need for more information.”

Andrew Kushner, senior policy counsel at CRL and report co-author, said, “In Colorado as elsewhere, the high cost of living challenges many working families to make ends meet. The cost of servicing mounting debt exacerbates the affordability problems they face.”

Background

The report uses several research methods: an analysis of checking account transactions of Coloradans using SaverLife, a financial technology nonprofit organization; an analysis of bankruptcy cases in the state; a review of the most recent lending data from the state attorney general’s office; long-form interviews with five Colorado consumers; and two focus groups with six Colorado financial coaches and counselors.

The report, “Buried in Debt: High-Cost Credit Products Harm Working Coloradans,” is linked here and above.

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Press Contact: Matthew Kravitz matthew.kravitz@responsiblelending.org