KUNM

predatory lending

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Lawmakers voted Wednesday to study a plan that would make small dollar loans available to state employees. At 26 percent interest, the loans would offer options for low income borrowers who have traditionally turned to high interest storefront loans.

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Senators Martin Heinrich and Tom Udall joined 28 other Democratic senators and two independents in sending a letter Friday to the director of the Consumer Financial Protection Bureau. They support new federal rules that would require lenders to check if customers could actually pay back their loans. The rules would also restrict the ways creditors could collect on debts.

Ed Williams

High interest, small dollar loans are abundant in New Mexico. Businesses offer quick cash payments for people who need money right away. But the interest rates on these loans can be as high as two thousand percent, and many people are unable to pay them off.   

This is especially true in the state's low-income communities. Statewide, storefront lending businesses outnumber fast food chain restaurants.

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KUNM Call In Show 3/5 8a: 

Critics say short term loans trap New Mexicans in a cycle of poverty. Often borrowers end up paying more than the amount of the loan in interest. But lending industry supporters say people who take out storefront loans know exactly what they are getting into and that there aren't other easy ways to get small loans quickly.

State lawmakers in Santa Fe are considering changes to how the storefront loan industry is regulated. Should we let the free market work it out or do New Mexicans need protection from what some call predatory lending? 

Payday Loan Cap On Hold Despite Prayers

Feb 4, 2015
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Despite the vocal support of a group of religious leaders, a legislative panel decided on a party-line vote Wednesday to set aside two proposals (HB 24 and HB36) that would have limited interest rates on short-term loans.

Lawmaker Wants To Cap Storefront Lending Rates

Feb 2, 2015
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The average person who takes out a short-term loan borrows about $650 and pays about 340 percent interest.  But rates on payday, title and installment loans would be capped at 36 percent if reformers get their way during the 2015 legislative session.

There were 657 small loan companies in New Mexico in 2013, many charging more than 175 percent, according to a report from the state Regulation and Licensing Department.