Colorado Installment Loan Rules: What Denver Borrowers Should Know

If you are comparing loans in Denver, Colorado, it helps to know the Colorado installment loan rules before you sign anything. The law changed a lot in 2019, and older advice about payday-style fees no longer describes Colorado’s small-dollar loans. This guide explains what the rules say, what they do not say, and how to compare your options.

Two kinds of loans, two sets of rules

Colorado treats small loans and larger loans a little differently. Small loans of up to $500 fall under the Deferred Deposit Loan Act. People still search for these as “payday loans,” but today’s legal product is a small installment loan with a long repayment period.

Larger installment and personal loans from finance companies are “supervised loans” under the Colorado Uniform Consumer Credit Code, often called the UCCC. A lender making these loans must hold a supervised lender license. For background, see our guide to the Colorado Uniform Consumer Credit Code.

The 36% APR cap on small loans

Colorado voters approved Proposition 111 in November 2018, and it took effect on February 1, 2019. It capped small deferred deposit loans at a 36% annual percentage rate. Before that, Colorado payday loans averaged well over 100% APR. Since the cap, most payday storefronts in the state have closed.

The cap covers the finance charge, and a lender may charge only the charges the Act expressly allows. If a Denver lender mentions an extra monthly maintenance fee or a large origination fee on a small loan, ask where in Colorado law that charge is allowed.

Amount and term limits

The rules for a small loan are simple to list:

• A lender may not lend more than $500 to one person at any time.
• A lender may make more than one loan to the same person only if the total stays at or below $500 and there is at least a 30-day wait between loans.
• The minimum term is six months from the loan date.
• There is no maximum term and no minimum finance charge.

The six-month minimum is the biggest change for borrowers. You cannot be asked to repay in two weeks, so each payment is smaller.

What a small loan costs: a worked example

Here is what 36% APR looks like when a loan is repaid in six equal monthly payments:

• $300 costs about $32.28 in interest. The payment is about $55.38 a month, and you repay about $332.28.
• $400 costs about $43.03 in interest, with payments of about $73.84 a month.
• $500 costs about $53.79 in interest. The payment is about $92.30 a month, and you repay about $553.79.

These figures are estimates. Your lender’s Truth in Lending disclosure shows the exact numbers. A big gap between your offer and these examples is a reason to ask questions.

Longer terms lower the payment but raise the interest

A $500 loan at 36% APR over 12 months costs about $102.77 in interest. The payment drops to about $50.23 a month, and you repay about $602.77 in all, compared with about $553.79 over six months. If you can afford the six-month payment, you will pay less in total. Our guide to APR versus interest rate explains why the APR is the best number for comparing offers.

Larger installment loans under the UCCC

For loans above $500, the UCCC governs what a licensed supervised lender may do. What a supervised lender may charge depends on the loan, so do not rely on rate figures from older articles.

Instead, ask the lender for the APR in writing, plus the total you will repay and the monthly payment. Then compare at least two or three offers. Our overview of Colorado installment loan rate caps can help you read what you receive.

Cancelling, paying early and renewing

Colorado gives small-loan borrowers several useful rights:

• Right to cancel. You may cancel the loan on or before 5 p.m. the next business day after the loan.
• Early payoff. If you repay early, the lender must refund a prorated share of the finance charge for the time left.
• Renewal. A small loan may be renewed only once, at no more than 36% APR, with a prorated refund if renewed early. After that, the debt must be paid. A lender may instead refinance it as a supervised loan under the UCCC.

If a loan is refinanced, read the new paperwork as carefully as the first. It is a new contract with its own cost.

Returned payments and collection limits

If a payment bounces, a lender may charge one returned-instrument fee of no more than $25 per loan. It may also seek court costs and reasonable attorney fees, but only if a court awards them, and attorney fees may not exceed the loan amount. No other default fees are allowed on a small loan.

You also cannot face a criminal penalty for taking one of these loans or because a check bounces, unless the account was closed before the agreed date. Colorado Legal Services helps low-income residents with civil problems such as debt collection. Debt cases in Denver go to the Denver County Court, and small claims there are limited to $7,500.

Online lenders and license checks

Online and out-of-state lenders must follow Colorado law when lending to Coloradans and should hold a Colorado license. Some claim tribal ownership or a partnership with an out-of-state bank. A Colorado law about some out-of-state bank loans is being challenged in federal court, and the outcome is not final. You do not need to follow the legal fight. Check a lender’s license on the Colorado Attorney General’s website before you share personal information.

Loans secured by a car

Colorado has no separate title-loan law. A loan secured by your car is a consumer loan that must follow the UCCC and come from a licensed lender. You can lose your car if you cannot pay. If you can, choose an unsecured option first.

Cheaper options to try first

A 36% loan is legal, but it is not the cheapest choice. Look at these first:

• Credit unions. Many Denver-area credit unions offer small personal loans. Check each one’s membership rules. As an illustration only, $1,000 at 18% a year over 12 months is about $91.68 a month and about $100.16 in interest.
• Payday alternative loans (PALs). Federal credit unions can offer PALs with interest of at most 28% plus an application fee of at most $20. Learn more at NCUA.gov.
• Payment plans. Xcel Energy offers payment arrangements for past-due balances, and many landlords and medical offices will do the same if you ask early.

Our page on credit unions versus high-cost lenders in Denver compares these paths in more detail.

Where to get help in Denver

If a bill is the problem, a loan may not be the answer. Dial 2-1-1, run by Mile High United Way, to find rent, food and utility help. For heating bills, Colorado’s LEAP program takes applications through Colorado PEAK, and Energy Outreach Colorado helps income-qualified households with past-due energy bills.

Check your budget before you sign

Denver’s local minimum wage is $19.29 an hour in 2026, but rent and groceries still take a large share of a paycheck. Add up your monthly payment against your take-home pay. If it leaves no room to spare, borrow less or look elsewhere.

Active-duty service members and covered dependents, including those connected to Buckley Space Force Base in Aurora, have a separate 36% MAPR cap under the Military Lending Act. Civilian workers, veterans and retirees are not covered.

This article is educational and is not financial or legal advice. Before you borrow, confirm the lender is licensed with the Colorado Attorney General — Consumer Credit Unit (UCCC Administrator), and read the fee disclosure in full.