Colorado Loan Agreement
A Colorado loan agreement sets the loan terms. Colorado lets a written contract set a rate up to 45 percent per year; a silent contract carries the 8 percent rate.
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Introduction
In Colorado, a loan agreement is a written contract to lend money and be repaid with interest, and the parties may agree in writing to any rate up to 45 percent per year. In Colorado the interest ceiling is high but real. Under Colorado Revised Statutes Section 5-12-103, the parties to a written instrument may stipulate for a rate above 8 percent but not exceeding 45 percent per year. If a written agreement does not state a rate, the legal rate is 8 percent per year, compounded annually (Colorado Revised Statutes Section 5-12-101). Making an occasional private loan does not require a license: a supervised lender license is needed only by a person engaged in the business of making supervised, higher-rate consumer loans under the Uniform Consumer Credit Code (Colorado Revised Statutes Section 5-2-301). Once the rate is set, a sound Colorado loan agreement names the parties, the principal, the interest rate as a number, the repayment schedule, any late fee, and what counts as default. It should include an acceleration clause, which lets the lender demand the entire unpaid balance at once if the borrower misses payments. Put the terms in writing: a rate above 8 percent must be stipulated in a written instrument, a lawsuit to recover the debt can be filed for six years (Colorado Revised Statutes Section 13-80-103.5), and a clear signed agreement is what protects both sides if the loan is later disputed. DocDraft builds your Colorado loan agreement from your facts, with attorney review available before you sign.
Key Things to Know
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A Colorado loan agreement puts in writing the lender's money, the borrower's promise to repay, the amount, the rate, and the due dates; when no rate is agreed the legal rate is 8 percent per year, while a written rate may run as high as 45 percent.
- 2
Colorado lets a written contract set a rate up to 45 percent per year. Under Colorado Revised Statutes Section 5-12-103, the parties may stipulate in writing for a rate above 8 percent but not exceeding 45 percent per year. That 45 percent figure is the general maximum lawful contract rate outside the special limits of the Consumer Credit Code.
- 3
If a written loan agreement does not state a rate, Colorado sets the legal rate at 8 percent per year, compounded annually (Colorado Revised Statutes Section 5-12-101). To charge more than 8 percent, up to the 45 percent ceiling, you must stipulate the higher rate in a written instrument.
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You do not need a license to make an occasional private loan. A supervised lender license is required only of a person engaged in the business of making supervised, higher-rate consumer loans under the Uniform Consumer Credit Code (Colorado Revised Statutes Section 5-2-301).
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Consumer loans made as a business have their own limits. The Colorado Uniform Consumer Credit Code sets separate rate caps and licensing for consumer credit, so a business lender faces stricter rules than the general 45 percent ceiling that governs a one-off private loan.
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Put the loan in writing and keep a late fee reasonable. A written, signed agreement is far easier to enforce, and any late charge should be a reasonable estimate of the lender's actual costs from a late payment rather than an arbitrary penalty.
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Spell out default and acceleration, and mind the deadline to sue. Define what counts as default, include an acceleration clause so the lender can demand the whole unpaid balance at once, and remember a lawsuit to recover the debt must be filed within six years (Colorado Revised Statutes Section 13-80-103.5).
Key decisions before you file
Before you file a Loan Agreement in Colorado, a few decisions shape the document: which option to choose and what each one means. The Loan Agreement guide walks through them.
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Colorado Requirements for Loan Agreement
Colorado lets a written contract set a rate up to 45 percent per year. Under Colorado Revised Statutes Section 5-12-103, the parties may stipulate in writing for a rate above 8 percent but not exceeding 45 percent per year. Keep a private Colorado loan at or below the 45 percent limit and state the rate as a number in the written agreement.
If a written loan agreement does not state an interest rate, Colorado sets the legal rate at 8 percent per year, compounded annually (Colorado Revised Statutes Section 5-12-101). To charge more than 8 percent, up to the 45 percent ceiling, stipulate the higher rate in a written instrument so the 8 percent default does not apply by accident.
A supervised lender license is required only of a person engaged in the business of making supervised, higher-rate consumer loans under the Uniform Consumer Credit Code (Colorado Revised Statutes Section 5-2-301). An individual making an occasional private loan is not in the business of lending and generally does not need a license. If you lend money repeatedly as a business, confirm whether you must be licensed before you lend.
The Colorado Uniform Consumer Credit Code sets separate rate caps and licensing for consumer credit made in the business of lending. A business lender therefore faces stricter rules than the general 45 percent ceiling that governs a one-off private loan. If the loan is a consumer credit transaction made by a lender in business, confirm the applicable Consumer Credit Code limit before setting a rate.
A loan need not be written to be enforceable in Colorado, but writing it down is strongly advised. A rate above the 8 percent legal rate, up to 45 percent, must be stipulated in a written instrument (Colorado Revised Statutes Section 5-12-103), and a written debt carries a six-year period to sue (Colorado Revised Statutes Section 13-80-103.5). Have both parties sign and date the agreement and keep a copy.
Colorado does not set a flat statutory late-fee cap for a general private written loan. A late charge is enforceable as a reasonable estimate of the lender's actual costs from a late payment, not as a penalty. Set any late fee in a Colorado loan agreement as a reasonable amount tied to your real costs, and keep total charges within the 45 percent general ceiling. Consumer Credit Code loans have separate rules.
Define default clearly, usually a payment missed past a stated grace period, a broken promise in the agreement, or the borrower insolvency. Include an acceleration clause so that on default the lender may declare the entire unpaid balance of principal and accrued interest immediately due. Stating any required notice and cure period avoids disputes about whether acceleration was proper.
A lawsuit to collect on a loan of a fixed sum must generally be filed within six years in Colorado, running from the default (Colorado Revised Statutes Section 13-80-103.5, covering a liquidated debt or a determinable amount of money). Keeping a signed written agreement gives you a clear, provable claim. Confirm the current deadline before filing, since it can turn on when the last payment or written acknowledgment was made.
Frequently Asked Questions
A loan agreement is a written contract in which a lender lends money to a borrower who promises to repay it, usually with interest, on an agreed schedule. In Colorado it should name the parties, the principal, the interest rate as a number, the repayment dates, any late fee, and what counts as default. Because Colorado lets a written contract set a rate up to 45 percent per year (Colorado Revised Statutes Section 5-12-103) and fills a blank rate at 8 percent, stating the rate in writing matters. A written debt can be enforced for six years.
For a general written loan, the maximum is 45 percent per year. Under Colorado Revised Statutes Section 5-12-103, the parties may stipulate in writing for a rate above 8 percent but not exceeding 45 percent per year. That is the general ceiling; consumer loans made in the business of lending are separately capped and licensed under the Uniform Consumer Credit Code. Keep a private Colorado loan at or below the 45 percent limit and state the rate in the written agreement.
A loan does not have to be in writing to be enforceable in Colorado, but writing it down is strongly advised. A rate above the 8 percent legal rate, up to the 45 percent ceiling, must be stipulated in a written instrument (Colorado Revised Statutes Section 5-12-103), and a written debt carries a six-year period to sue (Colorado Revised Statutes Section 13-80-103.5). A signed agreement stating the amount, the rate, and the repayment terms protects both sides.
Not for a one-off private loan. A supervised lender license is required only of a person who engages in the business of making supervised, higher-rate consumer loans under the Uniform Consumer Credit Code (Colorado Revised Statutes Section 5-2-301). An individual who makes an occasional personal loan is not in the business of lending and generally does not need a license. If you lend repeatedly as a business, confirm whether you must be licensed.
Charging more than the 45 percent general ceiling makes the interest unlawful, and a lender cannot enforce a rate above the limit (Colorado Revised Statutes Section 5-12-103). Consumer loans made as a business face additional penalties under the Uniform Consumer Credit Code for exceeding its rate caps or lending without a required license. The safest course on a private Colorado loan is to keep the stated rate at or below 45 percent per year.
If a written loan agreement does not state an interest rate, Colorado sets the legal rate at 8 percent per year, compounded annually, under Colorado Revised Statutes Section 5-12-101. To charge a higher rate, up to the 45 percent ceiling, you must stipulate the rate in a written instrument. Writing the agreed rate down avoids having the 8 percent default apply by accident.
Yes, if the fee is reasonable. Colorado does not set a flat statutory late-fee cap for a general private written loan, so a late charge is enforceable as a reasonable estimate of the lender's actual costs from a late payment rather than as a penalty. Tie any late fee in a Colorado loan agreement to your real costs, and keep total charges within the 45 percent general ceiling. Consumer loans under the Uniform Consumer Credit Code have separate rules.
For a loan of a fixed sum, you generally have six years from the default to sue in Colorado (Colorado Revised Statutes Section 13-80-103.5, which covers actions to recover a liquidated debt or a determinable amount of money). Keeping a signed written agreement gives you a clear, provable claim. Confirm the current deadline before you file, since dates can turn on when the last payment was made.