Statement on New Mexico's Restrictive Small-Dollar Lending Legislation

February 16, 2022, Washington, D.C. – INFiN, a Financial Services Alliance, issued the following statement in response to the New Mexico Legislature’s passage of an unworkable 36 percent APR cap on short-term, small-dollar installment loans:

“Make no mistake: the installment lending restrictions adopted by the New Mexico Legislature are not about consumer protection and will do nothing to address New Mexicans’ financial needs or ease the challenges they face. Rather, leaders in New Mexico have chosen to deny their constituents access to regulated, transparent, cost-competitive installment loans, with no concern for the consequences. 

“This law effectively eliminates one of New Mexicans’ last remaining tools for financial inclusion and stability. No licensed lender can sustainably extend credit under a 36 percent interest rate cap and cover basic operating expenses without subsidy. That’s why so few other providers – including the credit unions that supported the bill only after a provision requiring them to be accountable was removed – offer such loans at the scale necessary to meet New Mexicans’ needs.

“New Mexico will soon learn – as other states have experienced – that this arbitrary rate limit will leave consumers with little choice but to turn to the costlier, riskier, and less regulated alternatives that will only proliferate in the absence of licensed, broadly accessible options. New Mexicans’ need for credit will not disappear; only their regulated borrowing options will.”