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New Mexico has new interest rate cap on payday loans effective 1/1/2018
#11
(01-10-2018, 12:09 PM)kgord Wrote: Only 175 percent?? That is astoundingly high. I mean if they were going to but a cap on it..why not something reasonable like 35 percent or something? That is why I hate Payday loans so much. I mean if you could actually afford something different, you wouldn't be doing it!

175% is the annual interest rate, meaning that the monthly interest rate would be a little over 14%. This is not astoundingly bad for a payday loan in the United States in my opinion.
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#12
(01-11-2018, 04:43 AM)chikatilo Wrote:
(01-10-2018, 12:09 PM)kgord Wrote: Only 175 percent?? That is astoundingly high. I mean if they were going to but a cap on it..why not something reasonable like 35 percent or something? That is why I hate Payday loans so much. I mean if you could actually afford something different, you wouldn't be doing it!

175% is the annual interest rate, meaning that the monthly interest rate would be a little over 14%. This is not astoundingly bad for a payday loan in the United States in my opinion.

I think Annual Interest Rate is a very flawed way of looking at what you are paying.

For example, a 30-year mortgage for $136,000 at 5% Annual Percentage Rate will cost you $130,000 in fees!! That is almost 100% interest fee!
Now for a 30-day payday loan for $100 at 182% Annual Percentage Rate will cost you $15 in fees. That is 15% interest fee.

So, can you see how APR doesn't make sense when a loan is either extremely shorter than 1 year or extremely longer than 1 year? Short loans have big APR and long loans have small APR.
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#13
(01-16-2018, 09:50 PM)Michael Puttman Wrote:
(01-11-2018, 04:43 AM)chikatilo Wrote:
(01-10-2018, 12:09 PM)kgord Wrote: Only 175 percent?? That is astoundingly high. I mean if they were going to but a cap on it..why not something reasonable like 35 percent or something? That is why I hate Payday loans so much. I mean if you could actually afford something different, you wouldn't be doing it!

175% is the annual interest rate, meaning that the monthly interest rate would be a little over 14%. This is not astoundingly bad for a payday loan in the United States in my opinion.

I think Annual Interest Rate is a very flawed way of looking at what you are paying.

For example, a 30-year mortgage for $136,000 at 5% Annual Percentage Rate will cost you $130,000 in fees!! That is almost 100% interest fee!
Now for a 30-day payday loan for $100 at 182% Annual Percentage Rate will cost you $15 in fees. That is 15% interest fee.

So, can you see how APR doesn't make sense when a loan is either extremely shorter than 1 year or extremely longer than 1 year? Short loans have big APR and long loans have small APR.

I get what you're saying, but I still think APR makes sense. It simply shows what a person will pay in fees for a period of one year. It's no one's fault that repaying mortgages' can last 30 years. 

Based on the numbers you provided I'll summarize it this way:

Total interest rate if loans were to be repaid in 30 years:

Mortgages: 100%
Payday loans: 5 460%
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#14
That is a very good benefit for those that live in New Mexico. I used to reside in Albuquerque where payday loans are really common. It is a really high rate however at least it will not raise even higher. Thanks for sharing this article.
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