New Mexico Senate Passes 36% Rate Cap on Installment, Title Loans

Andy Spears
3 min readMar 4, 2021

The New Mexico state Senate passed legislation creating a 36% rate cap on short term installment and car title loans. Now, the bill moves to the House, where consumer advocates hope it will find strong support.

According to the Center for Responsible Lending, the current maximum interest rate on these types of loans in New Mexico is 175%.

State Payday Loan Rate Caps

Gov. Michelle Lujan Grisham cheered the Senate passage of the bill with a tweet, noting, “This legislation will protect New Mexico families and help ensure hard-working New Mexicans are not taken advantage of.”

An investigative report from tv station KRQE details the horrors of high interest installment lending in New Mexico.

It’s the kind of transaction you would expect to make in a back alley late at night. Yet in New Mexico, there’s a thriving industry that’s legally cashing in on hundreds of millions of dollars. We’re talking about the storefront installment loan business. Every year, more than 200,000 New Mexicans take out short-term installment loans at exorbitant interest rates, as high as 175%.

“It’s a very serious threat. I think it’s outrageous,” says Albuquerque attorney Karen Meyers. Meyers headed up Attorney General Gary King’s Consumer Division. “There are no policy reasons that support continuing to charge unfair, unaffordable, and exploitive loans,” Meyers said. “No one should have to pay triple-digit interest rates on a loan,” says New Mexico Center on Law and Poverty attorney Lindsay Cutler.

The National Consumer Law Center (NCLC) has put out a publication explaining the rationale behind the 36% rate cap which offers some historical perspective. Additionally, NCLC notes:

The 36% rate is not just an arbitrary number.

It has gained wide acceptance because:

  • The 36% rate has a long and well-recognized history in America dating back 100 years.
  • The 36% rate has been reaffirmed repeatedly at the state and federal level in recent years. Congress and three federal agencies have endorsed the rate. More and more states and their voters are capping small loans at 36% or less — currently 15 states and the District of Columbia.
  • The 36% rate for small loans results in payments that consumers have a decent chance of being able to pay.
  • A 36% rate gives lenders an incentive to offer longer term loans with a more affordable structure and to avoid making loans that borrowers cannot afford to repay.

The action in the New Mexico Senate and the support of the Governor is an encouraging sign for consumers.

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Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .