Reining in payday loans falls by wayside in New Mexico

http://www.kob.com/

ALBUQUERQUE, N.M. (AP) — Attempts to rein in payday loans in New Mexico fell by the wayside during the recent 60-day legislative session. While the small loans industry says it helps people in need, consumer advocates say a fix is sorely needed.

According to a 2014 study by the Pew Charitable Trusts, 14 states and the District of Columbia either ban payday loans or cap interest rates at 36 percent. Nine states have some restrictions, while 27 allow single-repayment loans with rates 391 percent or higher.

In my opinion, a 36 percent interest rate should be considered usury.  And since it’s the Big Banks and Wall Street who own these payday loan stores, it appears they are still in charge.

Predatory lending practices have been a target of consumer advocates for decades in New Mexico, one of the poorest states in the country. Bills that would have capped interest rates at 36 percent went nowhere. Industry members say businesses would be forced to shut down at that rate.

Google:  Usury, noun, the illegal action or practice of lending money at unreasonably high rates of interest.

Wikipedia:  A loan shark is a person or body who offers loans at extremely high interest rates.

6 thoughts on “Reining in payday loans falls by wayside in New Mexico

  1. I agree that 36% is usury. But if people knew how high the rates really became they would be shocked. Let’s say a mom runs out of diapers and formula, so she gets a $50 payday loan and agrees to pay back $75 from her next pay check. That is not unusual because they attach a loan origination fee plus an interest rate. If she pays it back at the end of next week, calculate that into an annual interest rate. If it’s 50% for 2 weeks, what does that become for the annual rate?

    Liked by 1 person

    • The way that the rates are calculated is also decided by Big Banks and Wall Street — which means it’s a lot worse than what’s advertised.

      Diapers should be free, like public restrooms for adults. 🙂

      Like

      • I agree…but if I could borrow $1000 right now i’d get my vehicle fixed…oh, and along the same lines is used car lots that finance…yeah poverty sux and the rich want use poor because they have folks doing the jobs they won’t

        Liked by 1 person

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