Hundreds gather on the state capitol to urge lawmakers to reject a proposed bill putting strict limits on loans.

Thousands of southern Colorado working families rely on payday loans. But that will change if a new law passes in the senate. Lawmakers recently approved Bill 1310 in the house putting strict limits on loans. The legislation proposes to impose a 45% interest rate cap on loan fees.

Payday loan stores say that would effectively shut down the industry, and force the elimination of approximately 1,800 jobs in Colorado. Bill supporters argue that it is important to regulate the industry that is a "debt trap" for customers already facing hard times.

Quinten Baker owns a trucking company. He says he relies on money grams, and payday loans to pay himself, and his employees. Baker says, "As far as the rate goes, it's kind of high, it's very high as a matter of fact.".

Payday lenders say it is not high if you consider this is a high risk loss business. "Ace Cash Express" says, if a customer moves skips out on a $100 loan, the next 26 must be paid to break even. They say laws like, the "Colorado Voluntary Payment Plan" that gives customers up to 6 more months at no extra charge, if customers are struggling to repay a loan. Regional Vice President, Bob Taser says, "What we've found, is 20% of our customers that used to do loans with us frequently have gone into the Colorado voluntary payment plan, and not gone back. I think that's a great definition to breaking the debt cycle."

On the other side of the coin, supporters of the bill say it just makes sense to avoid paying any loan fees if your strapped for cash. Denver Representative, Mark Ferrandino says, "The problem is they're already living paycheck to paycheck so those excessive fees they're paying just put them farther and farther into debt so they can never get out until their situation changes."

The senate is expected to consider Bill 1310 soon.

Source : http://fox21news.com/news/news_story.aspx?id=107528