Contact: Erika Martinez
(505) 986-4819
Erika.Martinez@nmlegis.gov
FOR IMMEDIATE RELEASE
December 23, 2014
Senator Bill Soules Files Legislation Proposing Interest Cap on Small Loan Lenders
If Passed, Will Protect Thousands of New Mexicans from Unmanageable Debt
Santa Fe, NM – Senator William (Bill) Soules (D-37-Dona Ana) will sponsor legislation for the upcoming session proposing to enact new sections of the New Mexico Bank Installment Loan Act and the New Mexico Small Loan Act imposing an interest cap on small loan lenders. This legislation, he says, is a measure to protect borrowers from being charged excessive interest rates, of sometimes over a 1000 percent, which puts thousands of people into unmanageable debt every year.
“Borrowers use these lenders as a source of revolving credit, similar to a credit card. While most of us may pay 12-15 percent on credit card debt, they are paying triple and quadruple digit interest on consumer loan payments that often soak up 25-40 percent of their income. For many, this results in a cascade of financial emergencies, from unpaid rent and eviction to unpaid medical bills. The industry destroys lives,” Sen. Soules said. “At least 16 states have enacted interest rate caps ranging from 17-36 percent, or placed outright bans on payday and title lending. I believe it’s time for New Mexico to join those states in protecting borrowers.”
The legislation proposes that the maximum interest charged shall not exceed 36 percent per year, that the limitation on interest shall not apply to any federally insured depository institution or government-issued bonds, and that any loan contract entered into after July of 2015 that exceeds the maximum lawful rate shall be void as to principal and interest.
“New Mexico’s small loan licensees are looting the working poor of about $100 million in interest and fees annually. This legislation will do more than just protect uneducated borrowers. It will also free up money to be spent in local stores and businesses, instead of being siphoned away to the out-of-state corporate interests that dominate this industry,” added Sen. Soules. “I am hoping for full bipartisan support.”
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