As of 2017, Payday Lending is officially illegal in New Mexico, but this doesn't mean that all loans that function as Payday Loans are actually gone, but what does that mean for families in New Mexico?
Q:What even is a Payday Loan?
A: A borrowed amount of money that is removed directly from your check every single pay cycle, to assure that you pay back, Usually a small amount of money borrowed compared to other bigger loans, and has a higher interest rate.
Q: How do interest rates work?
A: It's the amount, plus the amount you borrowed. If I borrow 100$, and you want to charge 200% interest I will give you 300$ to repay. Basically just 100*2+100=overall payment.
Q: What do Payday Lenders usually charge?
A: Previous to 2017 they were legally allowed to charge whatever they wanted, sometimes they were taken to court, and demanded to give paybacks for "usury loans" but very often, the people who use these small loans can't afford expensive class action lawsuits
Q: If payday loans are now illegal, why make this post?
A: Well, payday loans are gone in name now, and some of the practices have also been reigned in, but there is still a vast network of Small Loan Companies in New Mexico that follow many of the same practices. It's a quarter billion dollar a year industry, that functions mostly from giving exploitative loans to our most vulnerable people, families in poverty.
Q: How are they operating if they are not payday lenders?
A: All they did was change their name a little, and they were no longer subject to the rule change, that's why this coming year we have to reign them back in, and make sure they're reporting exactly what they're earning/