Installment loans are loans that extend repayment over a series of scheduled payments. Under New Mexico law, a covered small-loan installment product has a limit on the amount, payment structure, and cost. Identify the lender and the law governing the offer and compare the amount you receive to the amount you are obligated to repay.
What counts as a New Mexico installment loan?
Under the Small Loan Act, an installment loan is defined as a loan of $10,000 or less with at least four substantially equal payments of principal and interest, and a maturity of at least 120 days. Refund anticipation loans are excluded from this definition. These requirements create a legal category and do not mean all bank loans, vehicle loans, and other credit products that are advertised with installment payments conform to the same requirements.
A licensed small-loan company may offer secured or unsecured credit. With a secured loan, property must be pledged, which may be at risk should the loan not be repaid. With an unsecured loan, no collateral is pledged. The maximum amount a lender may advance is different from the amount it may offer an individual applicant.
New Mexico's price limit includes more than interest
As of January 1, 2023, under the Bank Installment Loan Act and the Small Loan Act, the Financial Institutions Division outlined the following limits on consumer loans in its regulatory guidance. These limits represent legal ceilings for covered loans and are not expected rates or offers.
| Loan amount | State cost limit | What to check |
|---|---|---|
| More than $500 through $10,000 | NM-APR cannot exceed 36%. | Compare your state disclosure with all required loan charges. |
| $500 or less | 36% NM-APR, plus a permitted fee up to 5% of the loan principal. | A borrower can't be charged the additional fee more than once in a 12-month period. |
State law requires disclosure of the NM-APR in addition to the federal Truth in Lending Act APR. NM-APR may incorporate fees that are excluded from the federal calculation. Compliance should not be assessed by verifying only the stated interest rate, and the two APR figures do not always have to be the same.
Hypothetical fee example: A 5% fee on a covered $400 loan is $20. That is the maximum additional fee under the small-amount exception, subject to the once-per-12-month restriction. It is not the loan's total cost, and it is not an extra five percentage points of APR. The written disclosures should show how the fee is paid and the complete repayment obligation.
Verify the company behind the offer
The Financial Institutions Division's small-loan company resources provide information regarding regulated products and provide licensing information. Match the creditor's legal name to the company in the license record. If a bank or credit union is the creditor, verify its charter and regulator. The small loan company license category is not the correct test for every banking or credit union institution.
SlickCashLoan is a loan request and matching service, not a lender. Once a lender receives a request, it determines whether to approve it and sets the terms of the offer. Read which entities may receive your information and which company would make the loan. A referral does not indicate an offer satisfies New Mexico law.
Compare the cash delivered with the repayment schedule
Consider the amount deposited to you or paid on your behalf; check the amount financed, finance charge, and total payments. The fees that are taken out of proceeds can limit the money available to you to cover your cost. The cost of credit also depends on the timing of repayment and charges applied.
Look at when your first payment is due, how often you make payments, and when the last payment is due. Four payments with a 120-day initial term are the minimum for the covered installment category. Other lenders may offer terms longer than four months. Keep in mind, longer terms may make each payment smaller but increase the total amount you pay in interest.
A fixed-rate loan with equal monthly payments can be approximated using a loan payment calculator. However, calculators without fees can't fully show an offer with charges. Thus, estimate payments against actual disclosures. Leave room in the budget for essential bills, including ordinary months and lean months.
Early payoff and problems during repayment
Section 58-15-15.1. states that a penalty or premium charged for prepaying the balance of a loan under the Small Loan Act is unenforceable. Demand a written payoff amount for the date you plan to pay. It does not mean that a prepayment of a loan automatically entitles you to a refund of all previously charged fees; the amount due is determined by accrued interest and other lawful charges.
Find out how much the extra payment will reduce the principal and if the lender changes the next due date. Review the agreement's provisions separately to cover late payments and returned payments. The loan agreement should specify the payment schedule and the charges that you are agreeing to.
If your income changes, let your lender know before you miss a payment to see if you qualify for a different payment arrangement. Extensions aren't automatic. Get any changes approved in writing and understand what effect they have on the total cost of the loan and the payments. If the payments aren't budget-friendly, working out a payment arrangement with the biller may relieve some of the financial stress without needing to take out a new loan.
Preparing an installment-loan request in New Mexico
Be prepared to provide identification, proof of residence, proof of income, and account information if requested. Document and credit inquiries as well as underwriting guidelines vary by lender. Determine whether an inquiry will be considered hard or soft prior to authorizing it; a request or prequalification does not guarantee approval or final terms.
Identify the creditor and covered loan category of any offers made to you. Once you have determined both, then analyze both APR disclosures, the cash you'll receive, and all scheduled payments. The written terms must cover the cost and fit within the limits of your budget to be accepted.