Effort resumes to cap interest rates on small loans - Albuquerque Journal

Effort resumes to cap interest rates on small loans

New Mexico lawmakers could revive a debate during the upcoming 30-day legislative session about whether to change the interest rate cap on loans issued by storefront lenders, like this title loan establishment in northeast Albuquerque. The current annual interest rate cap for small loans was set at 175% in 2017. (Robert Browman/Albuquerque Journal)

Copyright © 2022 Albuquerque Journal

SANTA FE – Attempts to lower New Mexico’s annual interest rate cap on small loans – from 175% to 36% – came up short at last year’s legislative session, but backers are planning to try again during the 30-day session that starts this month.

Gov. Michelle Lujan Grisham would have to add the issue to the session’s agenda in order for it to be considered, and a spokeswoman for the governor said there have been talks aimed at trying to reach a compromise in advance of the Jan. 18 start date.

However, several legislators said Tuesday no such agreement has been struck.

“I’m doing a head count now to see if I have the votes,” said Rep. Susan Herrera, D-Embudo. “It’s still up in the air.”

One area of compromise could involve lowering the maximum annual percentage rate cap for small loans, but by a smaller amount than some advocates prefer. Supporters say such action is needed to keep New Mexicans out of “debt traps.”

Sen. Bill Soules, D-Las Cruces, who sponsored last years’s bill that died after the House and Senate passed different versions of the legislation, said he’s open to a possible phased-in implementation of a lower interest rate cap.

But he said he’s keen to avoid a repeat of last year’s legislative session, in which the bill was amended in the House – with a higher rate cap for loans of $1,100 or less – amid concerns the proposal could make it impossible for some New Mexicans who need quick access to small amounts of cash to get loans.

“I’m not interested in starting on the Senate side at 36% and then having it go to the House and them change it to something I don’t think is reasonable,” Soules told the Journal.

New Mexico has had a colorful history with regulating the loan industry.

A previous 36% cap on loan interest rates was abolished by the Legislature in the 1980s amid high inflation, according to research done by the Santa Fe-based Think New Mexico, which has pushed for the lower rate cap to be reinstated.

After years of debate at the Roundhouse, lawmakers passed a 2017 bill that established the current 175% small loan interest rate cap and banned so-called payday loans with terms of less than 120 days.

But critics have insisted the 175% cap is too high for low-income New Mexicans, while also pointing out the U.S. armed forces have implemented a 36% annual percentage rate limit for loans obtained by active-duty military members.

Lujan Grisham spokeswoman Nora Meyers Sackett said the Democratic governor supports action being taken to protect New Mexicans from “predatory lending,” and said the Governor’s Office has been involved in conversations aimed at finding a consensus. Lt. Gov. Howie Morales has played a prominent role in those discussions.

But she also said if no agreement is reached, the issue might not be added to the legislative session’s agenda.

“We hope to be able to include such legislation in the 30-day (session), but that will depend in some part on the parties involved being able to identify a compromise or solution that will allow the bill to move forward and through the Legislature successfully – and that would also ensure disagreements about it do not spill into the limited time we have, which will be necessary for other key items,” Sackett said.

Critics of the push to lower the state’s current interest rate cap on small loans have argued that such a policy shift could put many companies out of business and push borrowers to use internet lenders, many of which are based in other countries and cannot be regulated.

During last year’s legislative session, one lending industry lobbyist said the industry employs an estimated 1,300 people across New Mexico.

But Kristina Fisher, associate director of Think New Mexico, said many of the loan companies operating are based outside the state, meaning loan payments don’t bolster the state’s economy.

“We’re really drawing dollars out of the state,” she said during a meeting Tuesday with Journal editors and reporters.

She and other supporters have also said New Mexico credit unions stand ready to provide loans with lower interest rates to state residents who need to get quick cash.

About 60% of New Mexico’s small-loan stores are within 10 miles of tribal land, where many residents live below the federal poverty line, according to the New Mexico Center on Law and Poverty.

Home » ABQnews Seeker » Effort resumes to cap interest rates on small loans

Albuquerque Journal and its reporters are committed to telling the stories of our community.

• Do you have a question you want someone to try to answer for you? Do you have a bright spot you want to share?
   We want to hear from you. Please email yourstory@abqjournal.com

taboola desktop

Los Ranchos judge, pets killed by husband in murder-suicide ...
ABQnews Seeker
Deputies say a man shot his ... Deputies say a man shot his wife, their dogs and a cat before killing himself Friday afternoon at the couple's home in Los Ranchos. ...
A tiny NM-TX border town is raking in recreational ...
ABQnews Seeker
Customers begin lining up on a ... Customers begin lining up on a hot Friday afternoon in mid-October at Ultra Health in Sunland Park. Just a three-minute drive away, others are ...
How does someone abandon an investment?
ABQnews Seeker
Q: I acquired a 10% interest ... Q: I acquired a 10% interest in a real estate partnership in 2018. The partnership is a Delaware entity and the property is in ...
Vegan food truck Lucky Goose opens brick-and-mortar location
ABQnews Seeker
Food truck Lucky Goose, which has ... Food truck Lucky Goose, which has catered to meat-free diners with vegan milkshakes and plant-based burgers, had its grand opening for its Nob Hill ...
Mama’s Minerals comes to Indian Pueblo Cultural Center's Avanyu ...
ABQnews Seeker
The retailer is New Mexico's largest ... The retailer is New Mexico's largest rock and bead store.
Escaping perfectionism is helping my small business
ABQnews Seeker
I realized that it’s more than ... I realized that it’s more than okay to be my true self at work
Belen puts a halt on new dispensaries
ABQnews Seeker
As the number of retail cannabis ... As the number of retail cannabis stores in Belen continues to grow, the city has put a temporary halt to new applications and zoning ...
Emptying the Notebook: Can somebody tell Donovan Dent he's ...
ABQnews Seeker
Here are some extra notes, quotes, ... Here are some extra notes, quotes, stats, tweets, video and whatever else I could empty out of the old notebook after Friday's Lobo basketball ...
A quiet space for time apart
ABQnews Seeker
Norbertine community adds lodging, meeting space ... Norbertine community adds lodging, meeting space to West Side center