ALBUQUERQUE, N.M. (AP) — Thousands of New Mexico residents may receive money back from high-interest lenders thanks to a state Supreme Court decision, Attorney General Gary King said Friday.
King said the ruling against two lenders who were charging as much as 1,500 percent for "installment loans" means his office can begin pursuing cases against dozens of other companies. His office has one other current case pending in district court and intends to investigate more, he said.
"There are a number of companies in New Mexico making similar loans, and for years those companies claimed that they are legal" in New Mexico, King said at a news conference in Albuquerque. "This case makes it very clear that's not true."
On Thursday, the New Mexico Supreme Court cracked down on small consumer loans carrying quadruple-digit interest rates. Justices said the high-cost "signature loans" violated the state's Unfair Practices Act and the interest-rate terms were "substantively unconscionable."
The Illinois-based companies — Cash Loans Now and American Cash Loans — made the loans from $50 to $300 at offices in Albuquerque, Farmington and Hobbs and targeted Hispanic and American Indian families, state officials said.
The companies' lawyer did not immediately return a phone call and email seeking comment on the ruling and King's comment.
The justices also capped interest rates at 15 percent for loans by the two companies that had been charging an annual percentage rate from 1,147 percent to 1,500 percent. That 15 percent rate is imposed as a default rate if those loans do not make it clear what the rates are, said King, who also is running for governor this fall as the nominee of the Democratic Party.
Up until now, the dozens of other similar companies operating in New Mexico have been charging high rates, King said. But the ruling now will set rate limits, although it's still unclear what the rate cap will be while district courts work to resolve the cases, he said.
The ruling does not affect payday loans because those loans are already regulated by the state law.
It also doesn't affect the ongoing dispute over title loans. Limits on those rates have been debated by state lawmakers for years, King said.
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