New Mexico Governor Susana Martinez signed into law on Friday a bill capping small dollar loans at 175% APR and banning loan products with terms less than 120 days, effectively ending the practice of payday lending in the Land of Enchantment. New Mexico joins a growing list of states that have either prohibited payday loans outright or severely limited interest rates.
The change in law is not expected to impact NAFSA members. NAFSA member tribal lending entities (TLEs) only offer installment loan products, a preferred method of small dollar loans with smaller payments and extended repayment periods similar to a conventional car loan or mortgage. Also, NAFSA member TLEs are economic arms of sovereign tribal nations and not subject to state usury and loan regulations. However, the New Mexico state legislature is sending a strong message to the unsustainable payday loan industry by passing legislation to curb the industry in favor of more responsible lending products like those offered by NAFSA member TLEs.
