The Southwest Public Policy Institute (SPPI) has announced that New Mexico's 36% annual percentage rate (APR) cap on small-dollar loans has led vulnerable borrowers to seek illicit emergency credit through unlicensed payday advances offered by Tara Jaramillo's company.
According to the SPPI, New Mexico's House Bill 132, enacted in 2022, imposed a 36% APR cap on short-term loans. This legislation effectively outlawed many forms of small-dollar lending that previously operated legally within the state. The SPPI argues that this move eliminated a significant segment of regulated financial services, particularly affecting low-income New Mexicans who often rely on such credit products during emergencies. In the absence of these legal options, a black market for payday-style loans has emerged, with unregulated lenders filling the gap through illicit means such as wage skimming and off-the-books cash advances. These practices pose greater risks to financially vulnerable borrowers.
The Piñon Post reports it uncovered that Positive Outcomes, owned by Representative Jaramillo, allegedly imposed a bi-weekly interest rate of 15%, equivalent to about 390% APR. On ultra-short two-day loans, rates reportedly soared to 2,700% APR. Additionally, the company deducted repayments directly from borrowers’ paychecks, often without full disclosure, raising concerns about predatory lending practices.
The SPPI is a nonpartisan, data-driven research and education nonprofit headquartered in Rio Rancho, New Mexico, with additional offices in Arizona and Texas. Founded to promote free enterprise, personal responsibility, and limited government, the institute focuses on policy reform in areas like education, crime, and economics across the American Southwest.
