Bill to Cap New Mexico Payday Loan Interest Rates Moves Forward

Inside Subprime: March 28, 2019

By Lindsay Frankel

A New Mexico bill to further cap payday loan interest is moving forward in the state legislature.

The bill limits payday lending interest rates to 36 percent.

It’s sponsored by Rep. Christine Chandler, D-Los Alamos, together with Rep. Susan Herrera, D-Embudo and Rep. Patricia Roybal Caballero, D-Albuquerque.

Consumer advocates in the state have long fought for payday loan regulations, warning that New Mexicans can get caught in a vicious cycle of payday loan debt due to exceptionally high interest rates.

There are now about 600 licensed payday loan stores in New Mexico, according to New Mexico’s Financial Institutions Division.

“All New Mexicans deserve a chance to more fully participate in our state’s economy,” said Christopher Sanchez, supervising attorney for Fair Lending at the New Mexico Center on Law and Poverty, to an NPR affiliate after those regulations were put into effect. “We hope to see additional regulations that would improve disclosures and language regarding loan renewals so that all borrowers can understand the terms of their loans.”

The payday loan industry says that it’s providing loans to people who wouldn’t otherwise have access to credit.

But the Associated Press reports that there are efforts in New Mexico to provide payday loan alternatives. “A number of local governments already are offering loans with moderate interest rates for public employees with little or no credit history,” according to the AP. But those local loans are only available to the government and larger businesses.

For more information on New Mexico subprime loans, see our city and state financial guides including Albuquerque and Santa Fe.