Copyright © 2022 Albuquerque Journal
SANTA FE — Starting next year, New Mexico will join more than 30 other states with 36% interest rate caps on storefront loans, after Governor Michelle Lujan Grisham signed a draft on Tuesday. bill that was passed by lawmakers after a multi-year debate on the issue.
Lenders say the enactment of the new law will help ensure that New Mexicans avoid getting caught in the spiral of debt by what they describe as “predatory lenders,” many of whom operate on or at proximity to tribal lands.
Currently, title loans and other small loans can carry annual interest rates of up to 175%.
“This bill means an end to crippling loans that hurt New Mexican families,” said Rep. Susan Herrera, D-Embudo, who was one of several lawmakers who sponsored this year’s measure.
Opponents of the bill, House Bill 132, argued during this year’s 30-day legislative session that lowering the state’s annual interest rate cap on small loans would result in losses of jobs and could make it more difficult for New Mexicans to access credit.
Andrew Duke of the Virginia-based Online Lenders Alliance said Tuesday the new law would ban about 95% of current loans used by about 400,000 New Mexico residents.
“This bill does not reduce the cost of credit – just the availability of credit,” Duke said in a statement.
However, New Mexico will join 32 other states and Washington in adopting a lower interest rate cap, according to the National Consumer Law Center.
In addition, the 36% cap is the same as that put in place by the United States Armed Forces for loans obtained by active duty military personnel.
This year’s legislation comes just five years after a 2017 bill that set the current cap on interest rates on small loans at 175% and banned so-called payday loans with terms of less than 120 days. .
The Loan Interest Rates Bill was one of 16 measures signed Tuesday by Lujan Grisham, who has until March 9 to act on 33 other bills approved in this year’s session which s ended on February 17.
Among the bills signed was House Bill 148, which extends the deadline for small businesses to apply for a state loan program from May 31 to December 31.
The governor also signed House Bill 164, a measure that calls for better interagency collaboration in cleaning up abandoned uranium mines around New Mexico.