By Katie Gutierrez, Tax, Budget, and Economic Reform Director, Think New Mexico.
Despite the success of the anti-predatory lending law in keeping credit accessible to low-income New Mexicans at dramatically lower interest rates, threats to the law are looming.
In 2022, Think New Mexico worked with Representative Susan Herrera, Senator Bill Soules, and members of the Fair Lending Coalition to win passage of legislation reducing the maximum annual interest rates of small loans from 175% to 36%. The law is worded to prevent charges over 36% for any small loans made in the state—including interest rates, fees, and transfer charges.
At the time, predatory lenders and their lobbyists argued that a 36% interest rate cap would make it impossible for lenders to offer small loans in New Mexico. The American Financial Services Association, a consumer credit trade association, claimed that: "The proposed rate cap would cut off an enormous number of New Mexico consumers from access to licensed, safe, affordable credit." But data collected in the years following the enactment of the cap in January 2023 show otherwise.
The Financial Institutions Division of the Regulation and Licensing Department found that New Mexicans saved over $50 million in fees and interest on small loans in 2023 and 2024 compared to 2022, the year prior to the cap.
At the same time, the total dollar value of small loans increased by 31.7%, after accounting for inflation. The number of small lenders did decrease after the cap was implemented, but 270 remain in business (out of 531 in 2022), offering loans that comply with the 36% cap. So more credit is being extended to New Mexicans, while borrowers are paying lower fees and interest.
It's not just small loan institutions seeing increased borrowing since the passage of the cap: New Mexico's member-owned nonprofit credit unions, tribal lenders, and other financial institutions are providing safer, lower-cost credit to those who may otherwise have sought out high-cost payday loans.
Credit unions reporting to the National Credit Union Administration (NCUA) show more loan originations and more loan dollar amounts between these periods. The organization showed a nearly 30% increase in the annual number of loans from December 2022 to December 2025. These NCUA-regulated, unsecured "Payday-Alternative Loans" have been capped at 28% APR since 2010, so they have seen these increases even while their rates have remained the same.
Unfortunately, a new genre of fintech companies that provide a type of credit called "earned wage access" (EWA) are now attempting to carve out an exemption that would allow them to offer this type of credit with no limit on the interest rate (for example, EWA lobbyists pushed to pass this carveout in 2025).
EWA products are payday loans: the principal and fees are deducted out of the borrower's bank account on payday. A report by the California Department of Financial Protection found that EWAs carry an average APR of 367%. If these lenders are exempted from the cap, New Mexicans would be paying an average of ten times the state's rate cap in loan costs for credit that poses nearly zero risk to the lenders.
Thanks to the 2022 law, New Mexicans already have safe, regulated, low-cost options for small loans. An exemption would undermine our anti-predatory lending regulation and make this type of emergency credit more expensive for those who need it.
If you have been the target of predatory lending practices with interest or fees over 36%, please visit the Attorney General's website and click "Get Help" to file a complaint.
Please urge your candidates for governor and the state House of Representatives to reject any exemptions to the small loan rate cap now.
