LOS ANGELES, Aug. 15 /PRNewswire/ -- Recently in Colorado House Bill 1351 passed which caps APRs for Payday Loans at a mere 45%, which effectively eliminates the possibility of offering payday loans at a rate that would even merely cover operating expenses, let alone account for the relatively high number of customers that default on these loans. For payday lenders, even direct internet lenders such as Payday Loan Trust, this means they will no longer continue to offer these short-term loans to residents in Colorado.

Typically payday loan customers are short on cash between paychecks and just need a little extra to get by until their next paycheck, many of whom have a less than perfect credit score and have literally no other options for short-term credit during these times. And although payday loans are a tightly regulated and fully disclosed financial product, these customers in Colorado will no longer have the freedom to choose a short-term loan when they decide it may help. Now, the payday loan option will be replaced by "installment" loans of $500 at a period of 6 months.

Many fear that by replacing payday advance loans with the new 6 month installment loans, borrowers in the State of Colorado may actually be negatively affected by the change in financial products. After all, it is hard to fathom why a 6 month loan would be any more helpful when you only need a little cash for a car repair, or until payday. But regardless of the outcome or implications of these new installment loans, most lenders have already closed their doors and stopped lending in Colorado permanently.

Payday Loan Trust, which prides itself on being a reputable trusted direct online payday lender and an advocate of education both customers and industry professionals about the true benefits and drawbacks of payday lending, has already stopped offering internet payday loans to Colorado residents in response to the new bill.

Unfortunately for customers in Colorado, as demonstrated in other States that have already banned or passed APR restrictions on paycheck loans, many of them may un-knowingly turn to un-licensed lenders on the internet. In states such as Georgia and South Carolina that have banned payday lending, the number of complaints against lenders increased drastically AFTER payday lending was shut down in the State. This is largely due to the fact that the demand for access to credit does not simply "disappear" along with the banned loan options, and many customers turn to "un-regulated" lenders online, which leads to more problems and complaints as opposed to customers with access to licensed and regulated lenders.

Colorado represents a possible trend in the payday lending industry of turning towards an installment loan product. The industry professionals at the Payday Advance Forum have predicted this for some time, and in a soon to be released Payday Loan Business Manual they discuss the possible evolution of Payday Loans into an Installment Loan business.

Because the demand for access to credit speaks volumes and has not decreased, responsible and licensed direct lenders such as Payday Loan Trust will make the necessary adjustments to continue to provide their customers with access to credit when they need it. Only time will tell what financial product will meet the needs of lenders over the next decade.

SOURCE AboutPaydayLoan.com