New Mexico Payday Loan Regulations Set to Take Effect
New faxless payday loan regulations will go into effect November 1. Gov. Bill Richardson, who pushed for the rules, calls them some of the toughest and most pro-consumer in the country.The law prohibits renewals and rollovers of payday loans, requires automatic 130-day payment plans for those who cannot repay their payday loan on time, imposes a 10-day cooling off period before individuals can request another loan after being in a payment plan, adds new consumer rights signage in payday loan locations, and requires that information be provided in Spanish.Consumers also will not be able to take out payday loans that exceed 25 percent of their gross monthly income.Richardson, Lt. Gov. Diane Denish, the Attorney General’s Office, as well as leadership in the state House and Senate, and a number of consumer advocates pushed for the new rules during the past three legislative sessions.To monitor compliance with the new regulations, all payday advance lenders operating in New Mexico must subscribe to a central computer database that tracks payday loan activity. The applicant’s name and identifying information must be entered into the database before a payday loan can be extended.Payday loans are short-term personal loans secured by a borrower’s check or agreement to have the money owed withdrawn from the borrower’s bank or credit union account at some future date.Many borrowers end up owing far more than the initial loan if they end up in financial difficulties because of the fees charged on such personal loans.