Payday Loans

New Mexico Payday Loan Laws

New Mexico though have not completely banned payday lending, it is one of those states in the United States of America that have imposed some strict laws to regulate this type of lending practices. New Mexico payday loan laws have been designed in a way to make sure consumers do not end up getting trapped into a viscous cycle of payday debt. However, it is important to note that despite so many legal restrictions over payday loan lenders, short-term cash advances still make a very expensive borrowing option in New Mexico because the laws allow lenders to charge a three-digit APR (annual percentage rate) on these small loans; various finance charges are additional. Nevertheless, as compared to other states, the laws in Mexico have provided great relief to those who are trapped into payday debt.

Criminal Action Is Prohibited

New Mexico, like many other states, has also prohibited payday lenders from filing any criminal lawsuit against a borrower just because he/she is unable to make the repayment in time. Inability to pay off a cash advance on the set due date is not treated as a criminal offence in this state unless there is really a criminal intent behind it.

Collection Charges

New Mexico payday loan laws have imposed a maximum ceiling on collection charges, which is $15. Payday loan lenders in New Mexico cannot charge more than $15 as NSF fee, that too, only one time per loan.

Rollovers Not Permitted And Repayment Plan Is Mandatory

In order to make things much easier on part of the consumers, the state laws have also strictly prohibited any provision for rollovers or renewals or refinance of loans because of nonpayment. If a borrower fails to repay the loan in time, the account will go to the collection department. Besides that, it will also be mandatory for them to allow the borrower to repay the loan in small, equal installments over a period of 130 days. No further interest or finance charges can be charged for this extended duration.

Interest And Other Fees

New Mexico payday loan laws allow lenders to charge $15.50 as interest on every $100 of loan. They can also charge a verification fee of $0.50 on every $100. Additional finance charges must not exceed $16 on the total amount of loan issued. Overall, if we calculate the annual percentage rate on a $100 of cash advance issued for a period of fourteen days, it amounts to a whopping 417.14% per annum.

Repayment Period And Loan Amount

The repayment period must range from at least fourteen days to thirty-five days. The maximum amount of loan amount that can be issued must not exceed $2500 or 25% of the gross monthly income, whichever is lower.

For more detailed information about the New Mexico payday loan laws, you can contact the New Mexico Financial Institutions Division, which is the regulatory authority in this state regarding payday lending. You can also contact them to file a complaint against specific lenders that you think are treating you or other consumers quite unfairly and illegally. Their fax number is (505) 476-4670, phone number is (505)476-4885, and address is 2550 Cerrillos Road, 3rd Floor P. O. Box 25101 Santa Fe NM 87505.

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Posted in Payday Loan Laws, Payday Loans | 2 Comments »

2 Responses to “New Mexico Payday Loan Laws”

  1. Jack says:

    A really knowledgeable article on the credit laws in New Mexico. State has not banned the lending of money instead tried to regulate this practice by some strict measures to ensure that borrowers should be benefited and did not get trapped in the debt. Despite all these efforts lenders are offering high rate of interest as it has not been illegalized .They are allowed to put additional charges. Non repayment of amount is not a criminal offence here unless it has been done intentionally. A maximum limit has been fixed on collection charges by the lending companies. No renewal or top up of loan is allowed, the only thing a lender can offer a simplified repayment option to consumer. No interest will charged in making a repayment schedule. Lenders can charge verification fees beside the interest on loan. Additional finance charges can be levied. Maximum and minimum tenure has been fixed .One can take a fixed amount of loan as per his monthly income. Any one can contact State financial department for any further clarification.

  2. Martin says:

    Very wisely described. New Mexico is known as a state which is very strict in regulating pay day lending program. Pay day loan laws do not give so much freedom to the creditors that they can take unfair advantage of their consumers. If a consumer is not able to do the repayment in time the creditor is not liable to take criminal action against them. The creditor can charge up to a specific maximum limit of amount as collection charges. When you default a repayment, your loan can not renewed or rolled over because it is restricted in the state. In case of non payment the creditor has to provide an alternative repayment plan which may be like small installments, and they can not charge any extra interest for the extended time. Interest rate of such loans becomes really high due to the addition of various other charges. This is the factor which makes the pay day loan very risky and expensive also. If any body facing, they can contact the concerned authorities of New Mexico. Any sort of discrepancy or any illegal proceeding with any pays day lending company

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