Payday loan also known as cash advance is a short term, unsecured loan issued to borrowers with jobs. This type of loan is easier to get than regular loan, as the process and requirements are a lot simpler, compare to traditional lending institution. The state of New Mexico legalized payday loans, but lenders subjected to specific laws that will protect both parties.
In New Mexico, both the borrower and lender determine the interest rate. The payday loan laws also prohibit rollovers and renewals of loans, but the loan is automatically subjected to 130 day payment scheme and an APR of 42%, in case the loan is not repaid on time but with a cooling period of 10 days. Moreover, payday loan should not exceed 25% of the borrower’s gross monthly pay or income, so the loan may be repaid on time easily.
In order to monitor the lenders compliance in issuing loans, the state of New Mexico order lenders to subscribe to the state central computer database, which allow tracking of payday loans daily activity. The borrowers name and other information are entered into the database before a new loan issued or extended.
State laws also require a loan agreement that discloses the consumer’s right, written on a 12 point type font size. The compromise loan agreement includes the free 130 days payment plan, and other essential details. But of course, borrowers that entered a payment plan are not allowed to take another loan.
When it comes to finance charges, lenders can charge borrowers with a $100 loan finance charge of up to $15.50 and nonsufficient fee capped at $15 once per returned check. Waiving of payment plans disallowed. By the way, when you apply for a loan the term is 14 days minimum and with stated maturity of 35 days maximum.Share