Payday Loans and Cash Advance in New Mexico

Prohibited; 36% cap on small loans since 2023. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in New Mexico.

Is a Cash Advance Legal in New Mexico?

Payday loans are not legal in New Mexico. The state repealed the payday loan sections of the New Mexico Small Loan Act of 1955, including 58-15-32 and 58-15-33, effective January 1, 2018, and required every small loan to be an installment loan with a stated maturity of at least 120 days, repaid in at least four substantially equal payments. Until the end of 2022 the rate ceiling was 175 percent. House Bill 132 of 2022, enacted as Laws 2022, chapter 23 and effective January 1, 2023, cut it to a permitted annual percentage rate of 36 percent, calculated under Regulation Z but counting every ancillary charge, insurance premium and add-on fee that Regulation Z would otherwise leave out. The only charge outside the rate is a fee of up to 5 percent of principal on a loan of $500 or less, once in any twelve-month period. The Act covers loans of $10,000 or less, and section 58-15-3 says a loan made or collected in violation of the licensing or rate rules is void. The Financial Institutions Division licenses small loan companies and takes complaints.

The governing law is New Mexico Small Loan Act of 1955, NMSA 1978 58-15-1 and following, as amended by Laws 2017, chapter 110 and Laws 2022, chapter 23 (House Bill 132) (NMSA 1978 58-15-2, 58-15-3, 58-15-14.1, 58-15-17; 58-15-32 and 58-15-33 (repealed)).

Loan Limits and Terms in New Mexico

New Mexico wrote its cap to count everything. Section 58-15-17(J) says the permitted annual percentage rate is computed under Regulation Z but must include charges for any ancillary product or service sold with the loan and any credit insurance premium or other insurance fee, even if Regulation Z would exclude them, so a lender cannot dress a 100 percent loan up as 36 percent plus insurance. There is one escalator: if the prime rate stays above 10 percent for three consecutive months, the ceiling rises by the amount prime exceeds 10 percent until prime falls back below 10 percent for three months, and the Division must post any change within ten days. Interest must be simple interest on the outstanding principal, never paid in advance or compounded, under 58-15-14.1. Section 58-15-3(E) makes unlicensed lending a petty misdemeanor and voids any loan made in violation of the licensing rules or of 58-15-17.

What a $300 Loan Costs in New Mexico

A 14-day loan is illegal in New Mexico, so this uses the 120-day minimum in NMSA 1978 58-15-17(G) and the maximum charges in 58-15-17(J). Simple interest at 36 percent a year on $300 repaid in four equal monthly installments of about $80.71 comes to $322.83 minus $300, or $22.83. The lender may add the one-time fee of up to 5 percent of principal on a loan of $500 or less: $15. Total cost 22.83 + 15 = $37.83, total repaid $337.83. APR by the site formula = 37.83 / 300 x 365 / 120 = 0.38, about 38 percent; the statute excludes the 5 percent fee from its own calculation, so the disclosed permitted APR would read 36 percent.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in New Mexico

• No one may make loans of $10,000 or less in New Mexico without a license from the Financial Institutions Division, and a loan made or collected in violation of the licensing rules or of section 58-15-17 is void (NMSA 1978 58-15-3(A) and (E)).
• A small loan may not carry a permitted annual percentage rate above 36 percent, counting all ancillary product and insurance charges, and the only fee outside the rate is one charge of up to 5 percent on a loan of $500 or less, once in twelve months (NMSA 1978 58-15-17(J)).
• Every small loan must have a stated maturity of at least 120 days and be repaid in at least four substantially equal installments, which rules out a balloon payment on the next payday (NMSA 1978 58-15-17(G) and (I)).
• When you sign, the lender must give you a statement showing the amount, date, payment schedule, security, principal, APR, dollar finance charge and every other charge, and must give a receipt for every payment (NMSA 1978 58-15-17(A)).
• Interest must be simple interest on the outstanding balance, never charged in advance or compounded, and after twelve months past maturity it may not exceed 10 percent a year (NMSA 1978 58-15-14.1, 58-15-17(F)).
• On request the lender must give you copies of your loan agreements, receipts and a full payment history, and must keep those records for seven years (NMSA 1978 58-15-17(O)).
• A violation of the Small Loan Act that amounts to an unfair, deceptive or unconscionable trade practice can be sued on under the Unfair Practices Act (NMSA 1978 58-15-3(G)).

Complaints and licence checks go to the New Mexico Financial Institutions Division, Regulation and Licensing Department: 505-476-4885, www.rld.nm.gov/financial-institutions, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in New Mexico

The 2022 amendments to section 58-15-3 were aimed at websites and rent-a-bank arrangements. Subsection D(2)(g) applies the license requirement to anyone who makes, offers, assists or arranges a loan above the rate permitted by Chapter 58 through any method, including mail, telephone, internet or any electronic means, regardless of whether the person has a physical location in the state. Subsection D(3) goes after the structure many online lenders use: a company that claims to be merely the agent or service provider for an exempt out-of-state bank is treated as the lender if it holds the predominant economic interest in the loan or the arrangement is otherwise built to evade the Act. A loan caught by those rules is void under 58-15-3(E). Tribal-affiliated and offshore sites still advertise short-term loans to New Mexicans at rates far above 36 percent; those loans are outside the Act, but the operators may keep debiting your account, so keep the paperwork and call the Division at 505-476-4885.

Alternatives If a Payday Loan Is Not the Right Fit

The legal small-dollar product in New Mexico is the licensed installment loan itself: at least four months, at most 36 percent plus the one-time 5 percent fee on loans of $500 or less, with no balloon payment and no compounding. Banks, savings and loans and credit unions are exempt from the Small Loan Act license under 58-15-3(C) and make small personal loans and lines of credit under their own rules; federal credit unions can also offer Payday Alternative Loans under National Credit Union Administration rules. A credit card cash advance is usually the fastest legal option for a few hundred dollars. Beyond credit, ask your employer about a wage advance, ask the utility, landlord or clinic for a written payment plan, and use New Mexico's 2-1-1 line to reach rent, utility and food assistance. If you already took a loan from an unlicensed website, it is void under 58-15-3(E); report it to the Division, and section 58-15-3(G) lets you sue under the Unfair Practices Act.

Compare the installment loan and payday alternative loan options before you decide.

Frequently Asked Questions

Nearby States

• ArizonaThe fee cap, a worked example and the regulator to call in Arizona.
• ColoradoThe fee cap, a worked example and the regulator to call in Colorado.
• TexasThe fee cap, a worked example and the regulator to call in Texas.
• OklahomaThe fee cap, a worked example and the regulator to call in Oklahoma.
• UtahThe fee cap, a worked example and the regulator to call in Utah.