Topic: Cash Pay Advance - New Mexico payday loan law doesn’t prevent spiraling debt, critics say (Albuquerque Tribune)
Payday loans are short-term advances of cash against a borrower’s future paycheck or when a lender holds a borrower’s personal check and agrees to cash it later to cover the debt. But the Center for Responsible Lending, a nonprofit research and policy group, contends that New Mexico’s law doesn’t impose a meaningful cap on loan costs and won’t prevent borrowers from becoming mired in debt. The interest rate would be about 47 percent for the $100 loan if paid through a 130-day extended repayment plan allowed under the law, Hagan said Tuesday. Borrowers in New Mexico still can become entangled in a long-term web of debt under the new law, he said, if they pay off a payday loan, obtain a new loan as soon as possible and then keep repeating that cycle. Find Out More
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