New Mexico Car Loan Laws

What a New Mexico car contract may charge

The Motor Vehicle Sales Finance Act, NMSA 1978 §58-19-1 and following, covers the retail installment contract you sign when a dealer arranges financing. Section 58-19-7 lists what the contract must show, including the amount of the finance charge, but it sets no rate ceiling. The APR is whatever you agree to, so a weak credit file can mean a high rate.

• Late charge. Only if the contract allows it, and only after a payment is at least 10 days late: 5% of the installment or $15, whichever is less.
• Collection costs. If the account goes to an outside attorney, fees of up to 15% of the amount due plus court costs may be added.
• Transfer of equity. If the holder agrees to let you transfer your equity to someone else, it may charge up to $25.
• A signed copy. Until the seller gives you a signed copy, you may cancel if you have not taken the car, and get your payments back.

Because the law does not cap the rate, shopping it is your protection. Get a quote from a bank or credit union first and see what the difference costs with the car payment calculator.

Dealer fees and the excise tax

• Documentary fee. No statute sets a dollar limit. A state consumer protection rule, 12.2.4.24 NMAC, makes it unfair to call a charge a documentary fee if it covers anything other than processing paperwork the law actually requires.
• Padding charges. The same rule bars items such as floor plan, handling, overhead or advertising charges when they are just extra dealer profit or not tied to a real product or service.
• Add-ons. A dealer may not add items like a service contract, credit life insurance or undercoating after the deal is agreed without your knowledge and consent.
• Excise tax. New Mexico charges a 4% motor vehicle excise tax on the price you pay. A trade-in allowance may be deducted from that price (NMSA §7-14-4).

What happens if you fall behind in New Mexico

New Mexico law does not give car buyers a notice and a set period to catch up before repossession. Once your contract treats you as in default, the lender may take the car without a court order under the Uniform Commercial Code, as long as the agent does not breach the peace.

1. 1 Repossession. The car may be taken without warning, but the agent may not breach the peace, for example with force or threats.
2. 2 Notice before the sale. The lender must send you a written notice before it sells the car.
3. 3 Redemption. Until the sale, you can get the car back by paying everything you owe plus the lender's reasonable costs.
4. 4 The deficiency. Section 58-19-7 says you remain liable for any shortfall as provided in the UCC (NMSA §55-9-608).

Our guides to repossession and the balance left after a sale explain how to check the lender's math.

Where to check a lender and complain

Companies that buy car contracts from dealers need a sales finance license from the Financial Institutions Division of the Regulation and Licensing Department. A dealer that keeps its own contracts falls under the act once it holds more than $100,000 of them. Small-loan and title-loan rules are on Lendmira's New Mexico page.

Questions people ask