SANTA FE, NM (AP) — New Mexico House lawmakers have approved legislation to discourage predatory lending by lowering the state cap on annual interest rates for storefront loans.
Democratic State Rep. Susan Herrera of Embudo is sponsoring a bill that would lower the maximum interest rate on storefront loans to 36%. At the same time, the bill would double the maximum size for small installment loans to $10,000, with repayment periods of up to two years.
The bill won House approval in a 51-18 vote Monday night and then went to the Senate for consideration.
Proponents of the bill say the restrictions are necessary to ensure borrowers don’t fall into a vicious cycle of debt that contributes to household poverty in New Mexico.
“This is an important step to improve the financial stability of our neighbors who are struggling to make ends meet,” Herrera said in a statement.
The bill also prohibits wage garnishment to remedy nonpayment of loans and stops accrual of interest within 90 days of nonpayment.
It strengthens disclosure requirements such as amortization schedules for loan repayment that aim to protect consumers. Co-sponsors include Democratic House Speaker Brian Egolf.
Similar legislative initiatives have repeatedly failed in recent years.
Copyright 2022 The Associated press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.