What is a New Mexico Title Loan?
A New Mexico title loan is a loan secured by the title of an applicant’s asset that has been awarded in New Mexico. Title loans in general, and their most common form, the automotive title loan, are high-interest (~300% APR), short-term (~1-2 months), and small-scale (~1-10k) loans that are similar in nature to payday loans. Rules regarding title loans vary widely by state, in the states where they are legal at all, which is about half of the country. For in-depth information regarding title loans, how they work, how they differ from payday loans, and how to get one, please see our comprehensive title loan page. In this article, we are going to focus on the specific eccentricities of title lending in New Mexico. Loan amounts, in general, for title loans are determined by the value of the asset being used as collateral. In New Mexico, short-term lending has recently been re-legislated to make it less feasible, or to make it more resemble traditional lending. According to H.B. 347, APRs are capped at 175%, and loan terms must be at least 120 days and include 4 substantially equal and equally scheduled repayments. All title loans are reported to consumer reporting agencies, and loans may not be given simultaneously, meaning that debt cycles have been functionally eliminated. Despite this progressive legislation, when it comes to repossession, title lenders aren’t required to offer a grace period on defaults, as they are in most other states, nor are they required to give notice of impending repossession, meaning that, as soon as a lendee has defaulted, the lender can repossess the asset in question.
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Interest rates on title loans lent in New Mexico have been capped, as of January 1st, 2018, at 175% APR, well below the national average.
There are no credit requirements in New Mexico to apply for a title loan, although an applicant’s ability to repay will factor into loan size and rate. Thus, the only requisite documentation, then, is a valid ID, proof of income, and some other cursory paperwork, such as proof of residency.
Title loans are legislated under the New Mexico Small Loans Act of 1955 and its recent amendment H.B. 347, and pursuant to this legislation have the following unique rules in place. Minimum Loan Limit: 120 Days (58-7-7, B) Maximum Annual Percentage Rate (APR): 175% (58-7-7, D) Installment Schedule: 4 equal payments (58-7-7, C)