-Rate Cap is Failing the Financial Wellbeing of New Mexico Consumers Since Taking Effect January 1, 2023-
ARLINGTON, Va. (November 14, 2023)—In the wake of the 36 percent interest rate cap that took effect in New Mexico on January 1, 2023, former users of credit products that have been forced out of the market by the misguided law have experienced a number of adverse effects, according to the results of a new survey conducted by the Online Lenders Alliance (OLA).
“Just as the case has been in other states where rate caps have been implemented, New Mexico’s rate cap is failing its citizens, specifically those who previously relied on these credit products to manage their finances,” said Andrew Duke, Chief Executive Officer of the Online Lenders Alliance. “Looking at New Mexico’s data from the past three years, approximately 225,000 people have sought small dollar credit products from nonbanks annually, with 92 percent of the loans issued now prohibited under the new law.”
“The evidence continues to pile up that rate cap policies are a financial disaster for consumers who use innovative fintech providers for credit access, as indicated by those consumers’ own responses,” Duke continued.
Among the survey’s key findings were that most former short-term, small-dollar loan users struggled with paying their bills since the rate cap took effect earlier this year and a majority of borrowers indicated they were unable to access credit at some point following the rate cap. When unable to access credit, consumers said they were left with poor alternatives, including late bill payments, skipping urgent appointments or vital expenses, or pawning valuables. And the vast majority of borrowers want the option to return to their previous lender, demonstrating support for the loan options available before the rate cap forced them out of the market.
The survey also found that 91 percent of respondents across all income levels said that the loan they received was effective in helping them manage the financial situation they were facing at the time. OLA’s survey was conducted from August 21 to September 18, 2023 and included 476 responses from New Mexicans who took out short-term, small-dollar loans from January 1, 2021 to January 1, 2023.
The full findings of OLA’s New Report—A New Mexico Consumer Survey: Understanding the Impact of the 2023 Rate Cap on Consumers—are available by clicking here.
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 to ensure consumers are fully informed and fairly treated. For more information, please visit www.onlinelendersalliance.org.