Small Loan Companies Already Leaving the State
In advance of New Mexico’s 36 percent rate cap on small dollar loans taking effect on January 1, 2023, Online Lenders Alliance Executive Director Andrew Duke released the following statement:
“The new rate cap is a shift in the wrong direction for the approximately 400,000 New Mexicans who rely on small dollar installment loans every year. With this law taking effect, 95 percent of those loans will be prohibited, hurting the consumers who rely on access to alternative credit and pushing them into more expensive and less desirable alternatives like late bill payments or overdrafts.
“We’ve seen the impact of these misguided efforts in other states with rate caps and regrettably, New Mexicans are likely to experience the same fate.
“Like similar restrictions on interest rates, this bill will not lower the cost of credit—just its availability. According to a recent news article, New Mexico has already seen a 7.5 percent decline in alternative credit providers in the past 6 months. Proponents used false narratives to brush these warnings aside, and the legislation was passed with an illusory promise that New Mexico credit unions would pick up the slack. But it was more than telling when the credit unions that lobbied for the rate cap bill began lobbying against it when faced with a requirement that they would actually have to report their results.
“New Mexico credit unions could still do the right thing, and we challenge them to report on their progress in serving the thousands of New Mexicans with credit needs. If they won’t, policy makers should hold them accountable. New Mexico citizens deserve the facts and the truth.”
About The Online Lenders Alliance
The Online Lenders Alliance (OLA) is the first trade association in FinTech. OLA is focused on credit inclusion, bringing together a diverse group of innovative companies who share a common goal: to serve hardworking Americans who deserve access to trustworthy credit. Our members are entrepreneurs, publicly-traded companies, lenders, credit bureaus, advertisers, lead generators, compliance professionals, and software developers who are leveraging technology to responsibly improve consumers’ financial health. Consumer protection is our top priority and OLA members abide by a rigorous set of Best Practices and Code of Conduct to ensure consumers are fully informed and fairly treated. For more information, please visit www.onlinelendersalliance.org.