Those “Cash Loans Now” or “Payday Loan” signs on storefronts draw in vulnerable customers in regions of the country like New Mexico, and are particularly detrimental to Native communities.
“The business plan of these predatory lenders is they go to where the access to capital is difficult or hard," Marvin Ginn told KUNM. Ginn runs Native Community Finance in Laguna Pueblo in Laguna, N.M., which is a financial lending and education institution. On it’s website, it warns people “Financial Predators are Targeting you!”
"The highest interest I’ve refinanced was 1,018 percent,” he said. “The most recent highest in the past two or three months has been 719 percent."
According to a 2012 report, 60 percent of Native Americans in New Mexico use storefront lending or pawnshop financing. The report also says, “lenders are allowed to charge any interest rate, over any length of time on all but the narrowly defined category of payday loans” and “there are no restrictions on security for loans or other terms.”
Ben Francisco, 90, who lives on the Navajo reservation, who spoke to KUNM through an interpreter, said he took out loans when his daughter got sick. He got behind on payments that ballooned to triple-digit interest rates, the news station reported.
Jean Phillips, Francisco’s lawyer with New Mexico Legal Aid, said that she’s seen many cases like Francisco’s. "I’ve seen people go hungry, I’ve seen people lose their homes over this,” she told KUNM.
Lawmakers in New Mexico say that their most recent attempt to regulate these businesses by capping interest rates on loans at 36 percent has been unsuccessful. State Sen. Bill Soules (D-Las Cruces, N.M.) sponsored the most recent bill.
"This isn't the end,” Soules told the Santa Fe New Mexican. “I intend to come back next year with a bill to stop a system that takes advantage of people.”