A late legislative session bill aimed at maintaining loan access for customers with bad credit is leaving consumer interest groups concerned that the measure will result in a higher cost of borrowing.

Those same groups are calling on Gov. John Hickenlooper to veto the bill, which they see as a harmful piece of legislation that flew under the radar during the recent session’s final days.

“It came late and we didn’t have much of an opportunity to vet all the issues surrounding the bill,” said Rich Jones, the policy and research director of the Bell Policy Center, a left-leaning think tank.

“We just think there are a lot of questions about the bill and the policy and we don’t think it’s good policy.”

But supporters of the measure argue that House Bill 1390 benefits poor borrowers and that the loans can help boost consumer credit scores for folks who often have to resort to payday lending options.

“These people have nowhere to go to get a loan,” said Sen. Cheri Jahn, D-Wheat Ridge, who helped sponsor the legislation in the Senate.

The bill received bipartisan sponsorship and support. It received just two no votes in the House, before passing the Senate by a vote of 20-15.

A governor’s office spokesperson said the bill is being reviewed.

“We just received it last week and our policy and legal teams are still analyzing the language and the policy behind the bill,” Kathy Green said through an emailed statement. “We’ve heard from a number of organizations with concerns, so we need time to review.”

Supervised loans allow borrowing options for those who otherwise wouldn’t be able to access a loan. Because these loans are considered high risk, they come with a higher interest rates than other types of loans.

Supporters worry that because lawmakers haven’t updated the financing structure on these loans in 15 years, banks may stop offering the loans, leaving poor borrowers to seek help from predatory lenders.

The maximum finance charge limits for each of the three-tiered loan levels will remain the same, under the bill. But the measure increases the unpaid balance limit for each tier, which could result in borrowers seeing their interest rates rise.

Right now, an unpaid loan balance of up to $1,000 is subject to a 36 percent interest rate, which is the highest-priced tier. That tier would be changed to include balances of $3,000 or less, under the bill.

A 21 percent finance charge would be applied to loan balances between $3,000 and $5,000, which is up from the current limit of balances between $1,000 and $3,000. And borrowers with a balance of $5,000 or more will be placed into the lowest interest rate tier pricing of 15 percent. That is also a $2,000 unpaid balance increase from the current structure.

Jones points to April 30 testimony from Julie Meade, an assistant Attorney General, who told the House Business Affairs and Labor Committee that the bill would increase the cost of an average $6,000 loan by 38 percent. And, according to Meade, the total finance charges will increase by up to $3,200 for a 36-month term loan.

The Attorney General’s Office, which oversees the loan activities, took a neutral position on the bill. But groups like the Bell Policy Center, Colorado Center on Law & Policy, Progress Now Colorado and the Colorado Progressive Coalition have written a joint letter to Hickenlooper, urging him to veto the legislation.

“We are not opposed to the loans, just to increasing the current rates so significantly,” the letter reads.

Danny Katz of the Colorado Public Interest Research Group said the bill benefits those that don’t need help – financial institutions.

“This bill simply takes money from Colorado family pockets and sends it to Wall Street and out-of-state investors,” Katz said. “That’s not how Colorado should do business or treat its families.”

But Jahn took issue with those denunciations.

“They’re trying to associate it to payday lending and it’s not,” Jahn said. “These financial institutions are willing to give loans to people with bad credit, who are trying to rebuild credit. So the interest rate is higher, but not as high as payday lending.

“These groups that come out opposing this, always say, ‘You’re taking advantage of poor people.’ No, not really. They have nowhere else to go.”

Rep. Jovan Melton, D-Aurora, a progressive lawmaker who represents a diverse Democratic district, was a House sponsor of the legislation. He told the House Business Affairs and Labor Committee last month that an update of the pricing structure is necessary to ensure that banks continue to offer the loans.

Melton said the loans are necessary to “ending financial deserts for low-income families” who otherwise would turn to predatory lenders.

In lobbying for a veto, consumer groups are asking the governor for more time to allow for a longer debate the issue. The bill was among the last House bills introduced at the Capitol and it passed through the Legislature on the final day of the session.

“The more we’ve looked at it, the more we’ve talked about it, the more questions get raised,” Jones said. “There’s no emergency. It’s not like it’s, ‘Sign it now and bad things are going to happen.’ Let’s look at it next year.”

– Twitter @VicVela1