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.
