Pay Day Loan Sharks are a Cancer in Carlsbad

Carlsbad has 17 small loan companies listed in the 2004 Valor phone book. These are predatory lenders. They take advantage of people who cannot borrow money anywhere else. They do not care if the person might be living on Social Security, or public assistance. They do not care how the person will pay back the loan. The companies that require a car title probably hope they are not paid back. The car title places will reposes a car from persons who have no other transportation. And they sell the cars for more that the amount borrowed.
Payday Loan Sharks are legal in NM. According to a local legitimate banker, a loophole in the NM banking laws allows these "businesses" to charge whatever they can get. Our Attorney General, Patricia Madrid, has a website page warning people about these places. This is the address of her warning http://www.ago.state.nm.us/divs/cons/loans/cons_loans.htm .

Abuses in making and collecting payday loans occur in a variety of ways. Cash-strapped customers are rarely able to repay the entire loan when payday arrives, because they need the new paycheck for current living expenses. Lenders encourage these customers to rollover or refinance one payday loan with another; those who do so pay yet another round of charges and fees and obtain no additional cash in return. If the check is returned for insufficient funds or the loan otherwise goes unpaid, the lender may threaten to involve the criminal justice system, a tactic that is possible only because a check, rather than a mere promissory note, is involved.

Senior citizens and young adults are the most willing victims to this scandal. Some of them know how much interest they are being charged, but because they are desperate they take loans. They hope they will be able to pay back, but probably cannot. Sometimes these people take out a loan at another company to pay off the first loan. They get caught in a vicious circle.

Who are the owners of these businesses in Carlsbad? The only objection I have ever heard was because of the colorful paint job of the company on Church and Canal. These businesses are a cancer on our economy. New Mexico is one of 12 states that have no laws to regulate predatory lending. This needs to be changed.