SANTA FE, N.M. (KRQE) – Lawmakers are making another run at cracking down on predatory lending. Larry Barker highlighted the problem last year, storefront lenders taking advantage of New Mexico’s law allowing up to 175% interest on small loans. The bill co-sponsored by Taos Representative Susan Herrera would set the cap at 36%.
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Lenders have argued it could put them out of business. But this week, consumer protection advocates told lawmakers, other states with similar caps have seen an increase in loan applications, with the boost in borrower confidence.
“A rate cap of 36% has been shown to be the essential component of affordable lending because it enables borrowers to make progress paying down their principal, and makes the loan cost reasonable, thus allowing them to build credit and avoid default,” said Consumer Protection Advocate Karen Meyers.
The bill cleared its committees and is headed to the full house. The proposal made progress last year but stalled when the house and SEnate could not agree on one version of the bill.