You Can’t Extend a Payday Loan in New Mexico

Posted on Thursday, September 10th, 2009 at 5:17 pm in Cash Loan Info by State

Since November 1, 2007, New Mexico has had new payday lending regulations that impose tighter restrictions on payday loans (also known as cash advances). When the new regulations came into effect, Governor Bill Richardson called them some of the toughest and most consumer-friendly in the country. There are currently some groups that want to further restrict the availability of payday loans and the allowable finance fees, but for the moment the 2007 legislation remains in force.

Under these regulations, you’re allowed to obtain a payday loan of up to $2,500, but the amount can’t be more than 25% of your gross monthly income. You’re only permitted one loan at a time, and the lender has to enter your details into an official online database to verify that you don’t have any other payday loans outstanding when you submit an application. If you’re approved, you’ll be offered a loan term that normally ranges from 14 to 35 days, although it is possible to borrow for a shorter period if you apply in writing for an exemption.

You’re not allowed to extend (roll over) your payday advance in New Mexico, so it’s best to ask for a long loan term if you’re unsure that you’ll be able to pay it back in full after just two weeks. Most lenders will give you back the fees you paid on the unused portion of your loan if you do decide to repay it early. There is a cooling-off period of 10 days in between loans, which means that you can’t take out another payday loan right after you’ve paid back the first one.

If you can’t pay back all the money you owe when the loan expires, you’re entitled to enter a 130-day repayment plan with zero fees or interest. Again, you’ll have to wait 10 days after completing your extended repayments before you can get another payday loan.

New Mexico state law allows lenders to charge up to $15.50 per $100 loaned in financing fees for each industry standard 14-day loan term. In addition, you have to pay a database verification fee of $0.50 per $100. This brings the total maximum charge to $16 for every $100 you borrow in every two-week period, which is equivalent to an annualized percentage rate (APR) of 416%.

If you apply for your cash advance at a neighborhood lending store in New Mexico, you’ll see a lot of new consumer rights information pertaining to your payday loan posted on the walls. In reflection of the large percentage of the state’s population for whom Spanish is the first language, that signage and all the paperwork you’re given once your loan is approved has to be provided in both English and Spanish.

With these tougher new rules in place, New Mexicans can be confident that their best interests are being taken into account whenever they take out a payday loan.