Gov. signs bill lowering max rate on small loans from 175% to 36%
New Mexico Gov. Michelle Lujan Grisham signed legislation this week that caps interest rates on small, short-term loans at 36%.
“As we continue to grow our economy and create quality jobs for New Mexicans across the state, protecting New Mexico consumers remains critically important,” said Gov. Lujan Grisham. “After many years of effort by advocates and legislators, I am glad to finally sign this legislation into law and deliver common-sense protections to vulnerable New Mexicans in rural and urban communities statewide.”
The legislation enacts a 36% maximum rate of interest chargeable under the New Mexico Bank Installment Loan Act of 1959 and the New Mexico Small Loan Act of 1955, limiting such loans to the same maximum annual percentage permitted by the U.S. Department of Defense for active-duty members of the military. The legislation also increases the maximum loan size from $5,000 to $10,000.
House Speaker Brian Egolf, one of the bill's sponsors, says it will help stop the debt trap consumers face when borrowing in emergency situations.
“This is going to make a real difference in the lives of New Mexicans who struggle to make ends meet. By capping these interest rates, we can stop the debt trap and help more families get ahead,” said Speaker Egolf. “This historic achievement is the result of years of hard work by Representative Herrera and other champions of our working families.”
New Mexico joins states like Illinois that have recently passed 36% rate caps on payday loans.