FARMINGTON, N.M. (AP) - New Mexico’s attorney general has sued a Farmington payday loan company for allegedly charging “exorbitant and grossly unfair” interest rates exceeding 1,000 percent a year.
The suit filed in Santa Fe on Thursday accuses Cash Now Loans of exploiting a loophole in state law that limits fees for short-term loans by extending the repayment length.
The company has been offering $100 loans with repayment plans of a year. That ultimately costs the borrower more than $1,000 to pay off.
The state filed a similar complaint against several branches of the payday loan company Fastbucks.
A spokesman for Attorney General Gary King says the office wants the companies to stop the practices. The suits also seek restitution for customers.
Representatives of Cash Now didn’t return calls seeking comment on Thursday.
(Copyright 2009 by The Associated Press. All Rights Reserved.)
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