New Mexico Payday Loan Laws and Legislation
In the state of New Mexico payday lending is considered legal but the regulations imposed over it are pretty strict. The government of the state takes all the measures to protect the residents and not let them get into financial trouble. Payday loans are expensive and it is easy to get in the debt circle especially if you live from paycheck to paycheck. The state regulates and monitors the activity of all payday lending companies and bars any attempt of usury to the extent possible. Still, payday lending businesses operate and represent a very expensive credit option. They are advised as last resort in case there are no other options. Lenders are allowed charging 3-digit APR on the loans they grant, not including all the fees and charges. However other laws do not allow lenders gaining profit from situations when people cannot get out of debts.
According to the state law payday loans should be repaid after 14 days minimum and no later than 31 days. Lenders are allowed to issue loans in the amount not exceeding $2500. It should also not exceed 25% of a person's monthly income including all the fees and charges.
Maximum interest rate in the state of New Mexico is $15.50 on every $100. Some lenders also charge verification fee that is not supposed to be larger than $0.50 on every $100. All the additional financial charges that a lender can choose to add to a loan should not exceed $16. In such case APR for a $100 loan issued for a period of two weeks amounts to 417.14% per annum.
Rollovers are prohibited in the state of New Mexico. It is required that a borrower should repay in time but provided that he or she is unable to, lenders cannot renew repayment period and take charges for it. This restriction was introduced with the aim of preventing borrowers getting into constant indebtedness. If a person cannot repay in time, a repayment plan that allows making equal installments throughout a period of 130 days is offered. Any additional charges and fees in this case are considered illegal.
Criminal actions are prohibited in the state of New Mexico and therefore lenders have got no rights for threatening borrowers with such lawsuits. In the state inability of repayment is not considered a criminal offence. The only case when a borrower is likely to get into a serious trouble is when he or she took out a loan and was not going to repay it. If it was done intentionally, a borrower is likely to get a lot of problems and can be taken to court; but only in this very case.
The state also imposes a cap on collection fees in order to protect borrowers. According to the law, collection fees should not exceed the amount of $15 in case of insufficient funds. This refers in general to any other collection charges as well.
The New Mexico Financial Institutions Division is the body in charge of all lending businesses in the state. In case of any questions or complaints, for any information about lenders, licenses, fees, or the like, borrowers are advised to contact this regulatory authority.
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