If you are comparing installment loans in Denver, Colorado, the first thing to know is that the price depends on the size of the loan and on who makes it. An installment loan is repaid in equal payments over a set time, so you know the payment and the end date up front. This guide explains how Colorado treats these loans, what they cost in real dollars, and what to try before you borrow.
Quick answer: Small installment loans in Denver, Colorado are capped at 36% APR, with a $500 limit and a minimum term of six months. Larger installment loans from licensed finance companies fall under the Colorado Uniform Consumer Credit Code, so always ask for the APR in writing and compare it with a credit union before you sign.
What an installment loan is
With an installment loan you borrow a fixed amount and repay it in scheduled payments, usually monthly. Each payment covers some interest and some of the balance. That is different from a single balloon payment due on your next payday, which is how older payday loans worked. In Denver you will see installment loans from finance companies, banks, credit unions and online lenders.
The loan can be small, such as a few hundred dollars, or larger, such as several thousand. Colorado law treats the smallest loans differently from larger ones, so the rules you should check depend on how much you plan to borrow.
How Colorado regulates these loans
Colorado is a 36% APR state. Voters approved Proposition 111 in November 2018, and it took effect on February 1, 2019. It capped what the law calls deferred deposit loans, the product people still search for as a payday loan, at a 36% annual percentage rate. Before that, Colorado payday loans averaged well over 100% APR. Since the cap, most payday storefronts in Colorado have closed.
Other installment and personal loans from finance companies are called supervised loans under the Colorado Uniform Consumer Credit Code, or UCCC. Lenders making them must hold a supervised lender license. The Colorado Attorney General, Consumer Credit Unit, serves as the UCCC Administrator and handles license checks and complaints.
The rules for small loans of $500 or less
The Deferred Deposit Loan Act sets clear limits for the smallest loans. They are worth knowing because they show what a fair small loan looks like:
- A lender may not lend more than $500 to one consumer at any time.
- A lender may make a second loan to the same person only if the total stays at or below $500 and at least 30 days have passed between loans.
- The minimum term is six months from the loan date. There is no maximum term.
- The cost is capped at 36% APR, and the lender may charge only the charges the Act allows.
If a lender offers you a $500 loan due in two weeks with a flat fee, that does not match how Colorado describes today’s legal product. Walk away and check the lender’s license.
What a small loan really costs
Here are examples at the 36% APR cap, 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 a payment 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.
Stretching the same $500 over 12 months lowers the payment to about $50.23 a month, but the interest rises to about $102.77, for about $602.77 repaid. A longer term feels easier each month and costs more overall. For a deeper look, see our guide to the cost to borrow $500 in Denver.
Larger installment loans: ask for the APR in writing
For loans above $500, lenders such as finance companies make supervised loans under the UCCC. The rules for those loans are more detailed, and the rate you are offered can vary by lender, loan size and your credit. Rather than relying on a number you read online, ask the lender for the APR and the total of payments in writing before you sign.
Federal Truth in Lending rules require the lender to disclose the APR, the finance charge, the amount financed and the total of payments. Read that box line by line. If two offers have different APRs, the lower APR for the same term is the cheaper loan.
Why a bigger loan is not always cheaper
Some borrowers hear that larger loans carry lower percentage rates and assume a bigger loan saves money. That can be true for the rate, but total dollars still rise with the amount and the length of the loan. Borrowing $2,000 when you need $800 means paying interest on $1,200 you did not need.
The better habit is to borrow the amount that solves the problem and no more. Do not split one need into several loans either, since each new loan adds its own costs. Our page on small loan costs in Denver walks through the numbers.
Your rights on a small loan
Colorado gives borrowers specific protections on deferred deposit loans:
- Early repayment: if you repay early, the lender must refund a prorated share of the finance charge for the time left.
- Cancelling: you may cancel the loan on or before 5 p.m. the next business day after the loan.
- Renewal: a 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, although a lender may refinance it as a supervised loan under the UCCC.
- Returned payment: the lender may charge one returned-instrument fee of no more than $25 per loan. Court costs and reasonable attorney fees apply only if a court awards them, and there are no other default fees.
- No jail: you cannot face a criminal penalty for taking the loan or because a check bounces, unless the account was closed before the agreed date.
To learn more about your protections, read Denver borrower rights under Colorado law.
Check the license before you apply
Online and out-of-state lenders must follow Colorado law when lending to Coloradans and should hold a Colorado license. Some online lenders claim tribal ownership or a partnership with an out-of-state bank. A Colorado law passed in 2023 that applies state rate caps to some out-of-state bank loans is being challenged in federal court, and the outcome is not final. You do not need to sort that out yourself. Search for the lender on coag.gov before you share any bank details.
Red flags include asking for an upfront fee, refusing to show the APR, and pressure to sign right now. Our online lender red flags guide covers more.
Cheaper options to try first
An installment loan is not always the best first step. Consider these before you apply:
- Credit unions: many offer small personal loans at lower rates. Check each credit union’s membership rules. As an illustration only, $1,000 at 18% over 12 months is about $91.68 a month and about $100.16 in interest.
- Payday alternative loans: some federal credit unions offer these, with interest of at most 28% plus an application fee of at most $20.
- Payment plans: ask a medical office, landlord or utility to split a bill into smaller payments.
- Xcel Energy: Xcel offers payment arrangements for past-due balances and income-qualified programs. Colorado’s LEAP, apply through Colorado PEAK, helps with winter heating bills, and Energy Outreach Colorado helps income-qualified households with past-due energy bills.
Compare these in more detail in Denver credit unions versus installment lenders.
Military families near Buckley
Active-duty service members, including active Guard and Reserve, and their covered dependents are protected by the Military Lending Act. It caps the cost of most consumer loans at 36% MAPR, a broader measure than APR that includes most fees. Veterans, retirees and civilian workers are not covered. Airmen, Guardians and their families at Buckley Space Force Base in Aurora, next to Denver, can also ask the base about emergency help from the Air Force Aid Society.
Where to get help in Denver
If you are unsure about a loan offer or a collection notice, two local resources can help. Dial 2-1-1 to reach Mile High United Way for referrals to rent, food and utility help in the Denver area. Colorado Legal Services helps low-income residents with civil problems such as debt collection and eviction.
Questions to ask before you sign
Take a few minutes with the paperwork. Ask what the APR is, what the total of payments will be, whether there is a prepayment refund, and what happens if you miss a payment. Confirm the lender’s license and keep a copy of the contract. If any answer is vague, wait. A legitimate lender will give you time to read.
When you are ready, use our loan application checklist to gather what you need, and if something goes wrong, see how to file a complaint against a Colorado lender.
Frequently asked questions
For deferred deposit loans of $500 or less, Colorado caps the cost at 36% APR. For larger supervised loans, ask the lender for the APR in writing and compare offers.
A lender may not lend more than $500 to one consumer at any time. A second loan is allowed only if the total stays at or below $500 and at least 30 days have passed.
The minimum term is six months from the loan date. Colorado sets no maximum term.
Yes. On a deferred deposit loan the lender must refund a prorated share of the finance charge for the time left.
Credit unions follow their own federal and state rules, and many price below what finance companies charge. Check each credit union’s membership requirements and ask for the APR.
No. You cannot face a criminal penalty for taking a deferred deposit loan or because the check bounces, unless the account was closed before the agreed date.
Search the Colorado Attorney General’s website at coag.gov for license information, and file a complaint there if a lender breaks the rules.
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.