45th legislature - STATE OF NEW MEXICO - first session, 2001

RELATING TO COMMERCIAL TRANSACTIONS; PROVIDING MAXIMUM RATES OF INTEREST FOR MOTOR VEHICLE LOANS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. A new section 56-8-11 NMSA 1978 is enacted to read:

"56-8-11. [NEW MATERIAL] RATE OF INTEREST--MOTOR VEHICLE LOANS.--

A. Except as provided in the Motor Vehicle Sales Finance Act, the rate of interest on a loan for which the lender takes or retains a security interest or lien on, or the title to, a motor vehicle shall not exceed the higher of:

(1) eighteen percent per year on the unpaid balance; or

(2) the published prevailing discount rate published pursuant to Subsection B of this section plus five percent.

B. On October 31 of each year, the director of the financial institutions division of the regulation and licensing department shall publish the current discount rate charged by the federal reserve bank of Dallas to member banks. The rate published shall be used to calculate the maximum allowable interest rate pursuant to Subsection A of this section for all agreements entered into in the calendar year beginning on January 1 after the date of publication.

C. As used in this section, "motor vehicle" means an automobile, recreational vehicle, recreational travel trailer, trailer, motorcycle, truck, semi-trailer, truck tractor or bus designed and used primarily to transport persons or property on a public highway, farm machinery or a vehicle, new or used, with any power other than muscular power except a boat trailer, aircraft or a vehicle that runs only on rails or tracks, but does not include any motor vehicle having a gross vehicle weight of ten thousand pounds or more purchased primarily for business or commercial purposes."

Section 2. Section 56-8-13 NMSA 1978 (being Laws 1957, Chapter 209, Section 4) is amended to read:

"56-8-13. PENALTIES AND FORFEITURES.--The taking, receiving, reserving or charging of a rate of interest greater than allowed by [this act] Sections 56-8-9 through 56-8-14 NMSA 1978, when knowingly done, shall be deemed a forfeiture of the entire amount of [such] the interest [which] that the note, bill or other evidence of debt carries with it or [which] that has been agreed to be paid thereon. In case the greater rate of interest has been paid, the person by whom it has been paid or his legal representatives may recover [back] by civil action twice the amount of the interest thus paid from the person [corporation or association] taking or receiving the same; provided that such action is commenced within two [(2)] years from the time the usurious transaction occurred."

Section 3. Section 56-8-14 NMSA 1978 (being Laws 1957, Chapter 209, Section 5) is amended to read:

"56-8-14. CRIMINAL PENALTY.--Any person [corporation or association] who [shall violate] violates the provisions of [this Act shall be] Sections 56-8-9 through 56-8-14 NMSA 1978 is guilty of a misdemeanor and upon conviction [thereof before the district court or a justice of the peace] shall be fined the sum of not less than twenty-five [($25.00)] dollars ($25.00) nor more than one hundred [($100.00)] dollars ($100)."

Section 4. A new section of the Motor Vehicle Sales Finance Act, Section 58-19-8 NMSA 1978, is enacted to read:

"58-19-8. [NEW MATERIAL] FINANCE CHARGE LIMITATION.--

A. The finance charge shall not exceed the higher of:

(1) eighteen percent per year on the unpaid balance; or

(2) the published prevailing discount rate published pursuant to Subsection B of this section plus five percent.

B. On October 31 of each year, the director shall publish the current discount rate charged by the federal reserve bank of Dallas to member banks. The rate published shall be used to calculate the maximum allowable interest rate pursuant to Subsection A of this section for all agreements entered into in the calendar year beginning on January 1 after the date of publication."

Section 5. Section 58-19-11 NMSA 1978 (being Laws 1959, Chapter 204, Section 11) is amended to read:

"58-19-11. PENALTY.--

A. Any person who [shall] willfully [violate] violates any provision of the Motor Vehicle Sales Finance Act or [engage] engages in the business of a sales finance company in this state without a license therefor as provided in [this] that act [shall be] is guilty of a misdemeanor and upon conviction shall be punished by a fine not exceeding five hundred dollars ($500).

B. A willful violation of any of the provisions of [Sections 7 or 8 of this act] Section 58-19-7 or 58-19-8 NMSA 1978 by any person [or individual] shall bar recovery of the finance charge, delinquency and collection or other charges whatsoever by the owner or holder of the retail installment contract involved."