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Online Lenders Alliance: Colorado Consumer Lending Study Confirms that Rate Caps Reduce Credit Options for Consumers and Fail to Improve Consumers’ Wellbeing

By January 25, 2023April 26th, 2024No Comments

ARLINGTON, Va. (January 25, 2023)—After Colorado Attorney General Phil Weiser released a study of consumer lending undertaken by the Financial Health Network as directed by the Colorado General Assembly, Online Lenders Alliance Executive Director Andrew Duke issued the following statement:

“While there are a number of notable findings in this study on consumer lending in Colorado and other states, the data confirms previous studies’ findings that interest rate caps reduce access to credit for consumers who need it. In fact, small dollar loans are less available for nonprime consumers in Colorado than in Utah or Missouri, states with fewer restrictions on small dollar lending. This leaves consumers with fewer choices, and arguably worse ones, when a credit need arises.

Among the findings in the study:

  • For small-dollar loans and larger loans, the penetration rate (a variable used to measure the availability of credit access) for nonprime consumers is lower in Colorado than in less restrictive states like Utah and Missouri. In other words, credit is less available in Colorado than in other states.
  • For small-dollar loans, Colorado consumers who were subprime or deep subprime experienced more delinquencies than consumers in Missouri, a state without a rate cap. When looking at derogatories, Colorado consumers fared slightly better than Missouri consumers.

“While there are conclusions in the study we agree with, there are some assertions made by the AG’s Office that don’t seem to be supported by the data in this or other studies, including:

  • The AG asserts that “available evidence indicates consumers who qualify are able to obtain alternative charge loans, given the growth of online lending.”
    • However, the study shows that consumers have less access to credit in Colorado relative to consumers in other states like Utah and Missouri.
  • The AG asserts that “borrowers in the comparison states—and especially borrowers in the subprime and deep subprime credit tiers—experience greater levels of repayment difficulty than Colorado borrowers.”
    • However, the study shows that when looking at 30-day delinquencies and 60-180-day delinquencies, subprime and deep subprime consumers of unsecured installment loans were substantially worse-off in Colorado than consumers in Utah and Missouri. Only in derogatories were Colorado consumers better off than consumers in those other states. Also, as the report acknowledges, derogatories might have already been there when the loan was originated.

“Lastly, by only looking at borrowers who were successful in their attempt to obtain credit, the study misses a critical opportunity to capture the real-world impacts on consumers who have used these credit products in the past but have been unable to do so since Colorado’s rate cap was implemented.

“The Online Lenders Alliance will continue advocating for the consumers who need access to these credit products and for their right to access them.”

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About The Online Lenders Alliance

The Online Lenders Alliance (OLA) is the first trade association in FinTech. OLA is focused on credit inclusion, bringing together a diverse group of innovative companies who share a common goal: to serve hardworking Americans who deserve access to trustworthy credit. Our members are entrepreneurs, publicly-traded companies, lenders, credit bureaus, advertisers, lead generators, compliance professionals, and software developers who are leveraging technology to responsibly improve consumers’ financial health. Consumer protection is our top priority and OLA members abide by a rigorous set of Best Practices and Code of Conduct to ensure consumers are fully informed and fairly treated. For more information, please visit

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