Can a lender in New Mexico charge you 150% APR on an installment loan? Not legally, if the loan is $10,000 or less. Since January 1, 2023, state law has capped those loans at 36% APR, and most fees count toward that 36%.

This matters if you are under contract on a house and something in the budget comes up short, such as a repair or a moving bill. Every consumer installment loan of that size in New Mexico has to be made under one of two state laws, and both carry the same ceiling.

How the 36% ceiling works

Under NMSA 58-7-3, loans of $10,000 or less must be made under the Small Loan Act of 1955 or the Bank Installment Loan Act of 1959. House Bill 132 set both at 36% APR, down from 175%.

The APR is figured under Regulation Z, the federal Truth in Lending rule. New Mexico then adds charges that federal rule would leave out: add-on products and services, fees tied to making the loan, and credit insurance premiums. According to Troutman Pepper Locke's analysis, only fees paid to public officials, such as lien recording, stay outside.

Section 58-15-17 also fixes the loan's shape. The figures below are as of the statute's January 1, 2023 effective date.

Rule What New Mexico law says
Loan amount covered $10,000 or less
APR cap 36%, fees and credit insurance included; rises if the prime rate tops 10% for three straight months
Extra fee on small loans Up to 5% of principal on loans of $500 or less, once a year
Minimum term 120 days, at least four substantially equal payments
Interest 12+ months past maturity, or after the borrower's death 10% a year
After a court judgment Costs and attorney fees only
Rollovers Not addressed in the sources we used

Online lenders and the workarounds the law targets

Small loan companies need an annual license from the Financial Institutions Division of the Regulation and Licensing Department, which keeps a quarterly-updated directory and takes complaints. Banks and credit unions are exempt because they are regulated separately.

The 2023 law reaches nonbank companies that partner with an out-of-state bank to get around the cap, by mail, phone or internet, and bars evasion "by any device, subterfuge or pretense whatsoever." Our sources do not address lenders claiming tribal status. Treat any quoted APR above 36% on a loan this size as a warning sign.

One product to watch: earned wage access, or paycheck advance apps. A 2025 bill to exempt them from the cap failed in committee, and as of April 2026 Think New Mexico reported the companies were still lobbying. California data put their average APR at 367%.

Not a payday loan, and not the 15% rate

The 120-day, four-payment minimum is what separates these loans from the short, single-payment products covered in payday loans in New Mexico. The state's 15% general usury rate is also different: it applies only when no written agreement sets another rate.

Where to ask first

As of January 2023, KUNM reported about 145 credit union branches statewide offering small loans under a federal cap of 28% APR. Credit union small loan originations rose nearly 30% from December 2022 to December 2025. Our sources name no state assistance program for this kind of gap.

If you close on a house in the next few weeks

A new installment loan shows up as a deposit and then as repeating payments on the bank statements your underwriter reviews. Expect a request for a letter of explanation. The monthly payment may be counted in your debt-to-income ratio, which could change what you qualify for.

Before borrowing, ask your loan officer two things. Will this payment be counted? Does paying the loan off before your application or closing change that? The answer depends on your lender and loan type, so get it in writing before you sign.