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Proposition 111: Everything you need to know about the 2018 Colorado ballot question

Proposition 111 centers around payday loan rates in Colorado.

Type: Change in state law. Simple majority required for passage.

At issue: Should payday lenders be banned from charging customers more than 36 percent interest?

Today, Colorado ostensibly limits payday loan interest to 50 percent. But when you factor in the additional fees lenders are allowed to charge, the average loan winds up charging a whopping 129 percent annual percentage yield. This would do away with the fees, and limit the interest to 36 percent APY. It would apply the same limits to lenders that operate online, by mail and by phone.

The ramifications: High interest rates can trap low-income residents in a crippling cycle of debt, where they’re left using one payday loan to pay off the last. Lower interest rates could help. They could also put payday lenders out of business if the rates are too low to compensate for the high risk of default by low-income borrowers.

For more: Read the measure and the ballot analysis.

— Brian Eason, Special to The Colorado Sun 

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