SANTA FE, NM (AP) - A bill capping interest rates at 36% per annum for low dollar loans was approved by the New Mexico Senate on Tuesday.
Proponents argue that the current law allows short-term loans to benefit the poor and send borrowers into a debt spiral.
“Accessing up to two triple-digit interest rate credits is like giving a hungry person poisoned food. It doesn't really help them and it only makes things worse, ”said the co-sponsor of the bill, Senator Katy Duhigg, D-Albuquerque.
Rates are capped at an annual rate of 175% for loans of $ 5,000 or less. The measure would extend the restrictions to loans of $ 10,000.
Senators opposed to the bill, mostly Republicans, argue that the 36% annual percentage rate would limit one-month loans to just 3%, leading some lenders to bankruptcy and cutting credit options for the low-income residents.
Republicans in the House and Senate have pleaded for more financial literacy for young people instead of tough rules against high-interest rates.
Senator William Sharer argued that too many New Mexicans are unbanked and cannot rely on traditional lenders like credit unions.
Duhigg said some credit unions and nonprofits can fill the need for small, INSTANT LOANS ONLINE WITH OAKPARKFINANCIAL.
The bill passed in the Senate largely along party lines in a 25-14 vote. He is now heading for the Chamber, where he should pass.
Democratic Representative Susan Herrera d'Embudo was jubilant as she listened to the Senate vote from her desk in the Roundhouse. “I don't know how many people in the Senate and in the House tried to get this bill passed and lost it, but this is the year it will pass,” she said.
Herrera said aggressive lobbying from the short-term lending industry had delayed the bill, adding that the industry was making a lot of campaign donations, but senators were sworn in this year to turn the tide.
Jason Weeks, a lobbyist representing affected loan companies, did not immediately respond to requests for comment before and after the vote.
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