Payday loans, title loans, signature loans. New Mexico has more than 656 small lenders operating in nearly every town. On a nearby street, they’re so thick they perch next to one another, like turkey vultures on a snag.
There’s a small argument to be made for their services, but they’re basically a drain on the economy.
Lawmakers have tried to get a handle on small lenders since at least 1999, but we haven’t seen much impact. In 2007, the Legislature cracked down by limiting payday loans to 35 days, prohibiting indefinite loan rollovers, and capping interest rates at 400 percent. The small lenders just found ways around it.
Cash Loans Now and American Cash Loans (with offices in Albuquerque, Farmington and Hobbs) avoided the net by shifting from payday lending to signature loans, which require no collateral.
In 2009, the attorney general sued the two companies for predatory lending and for an interest rate in excess of 1,400 percent a year. On June 26, the state Supreme Court ruled in favor of borrowers. The interest rate, said both courts, was “unconscionable.” One borrower earned $9 an hour at a grocery store; the $100 loan had a finance charge of $1,000. Another, earning $10.71 at a hospital, got a $200 loan with a finance charge of $2,160.