How Much Interest Can I Charge on a Past Due Invoice in New Mexico?
The answer will depend on the terms of the contract involved. The interest you intend to charge should be written in your contract or rider at the time you agree to do the work, or the interest charge for late payments should be described in the agreement your customer signs at the time your business extends credit to him/her. Liability for interest charges generally need to be disclosed to the customer at the time the agreement is made. However, if you file a claim in court to collect the debt, you may ask the court to add interest to the amount of the jugdment. Maximum interest rate laws don't apply if the debtor is a corporation or limited partnership.
A late fee is normally assessed as a monthly finance charge. Figuring out what to charge is a two-step process. First, divide the annual interest rate you want to charge as a late fee by 12 to determine your monthly interest rate. Next, multiply this monthly rate by the amount due to determine the amount of the monthly late fee. For example, if the annual interest rate is 12%, the monthly interest rate is 1%. If a client owed you $10,000, you'd multiply this amount by 1% to figure out how much the client owes you every month as a late charge. One percent of $10,000 is $100, so the client would owe you an extra $100 for every month his payment was late.
Please see the following NM statutes:
56-8-3. Interest rate; no written contract.
The rate of interest, in the absence of a written contract fixing a different rate, shall be not more than fifteen percent annually in the following cases:
A. on money due by contract;
B. on money received to the use of another and retained without the owner's consent expressed or implied; and
C. on money due upon the settlement of matured accounts from the day the balance is ascertained.
56-8-4. Judgments and decrees; basis of computing interest.
A. Interest shall be allowed on judgments and decrees for the payment of money from entry and shall be calculated at the rate of eight and three-fourths percent per year, unless:
(1) the judgment is rendered on a written instrument having a different rate of interest, in which case interest shall be computed at a rate no higher than specified in the instrument; or
(2) the judgment is based on tortious conduct, bad faith or intentional or willful acts, in which case interest shall be computed at the rate of fifteen percent.
B. Unless the judgment is based on unpaid child support, the court in its discretion may allow interest of up to ten percent from the date the complaint is served upon the defendant after considering, among other things:
(1) if the plaintiff was the cause of unreasonable delay in the adjudication of the plaintiff's claims; and
(2) if the defendant had previously made a reasonable and timely offer of settlement to the plaintiff.
C. Nothing contained in this section shall affect the award of interest or the time from which interest is computed as otherwise permitted by statute or common law.
D. The state and its political subdivisions are exempt from the provisions of this section except as otherwise provided by statute or common law.
56-8-5. Interest; open accounts.
In current or open accounts there shall not be collected more than fifteen percent interest annually thereon, thirty days after the delivery of the last article or service; provided that the parties may set a higher rate by agreement.
56-8-9. Excessive chages prohibited; applicability of maximum rates; definition.
A. Unless otherwise provided by law, no person, corporation or association, directly or indirectly, shall take, reserve, receive or charge any interest, discount or other advantage for the loan of money or credit or the forbearance or postponement of the right to receive money or credit except at the rates permitted in Sections 56-8-1 through 56-8-21 NMSA 1978.
B. No provision of law prescribing maximum rates of interest that may be charged in any transaction shall apply to a transaction in which a corporation is a debtor, regardless of the purpose for which the corporation was formed and regardless of the fact that an individual is codebtor, endorser, guarantor, surety or accommodation party. No corporation or its codebtor, endorser, guarantor, surety or accommodation party shall have a cause of action or affirmatively plead, counterclaim, set-off, or set up the defense of usury in any action to recover damages or enforce a remedy on any obligation executed by the corporation and no civil or criminal penalty which would otherwise be applicable except as provided in Sections 30-43-1 through 30-43-5 NMSA 1978 shall apply on any obligation executed by the corporation.
C. A lender may, in the case of business or commercial loans for business or commercial purposes in the amount of five hundred thousand dollars ($500,000) or more, take, receive, reserve or charge on any loan or discount made, or upon any note, bill of exchange or other evidence of debt interest at a rate agreed to by the parties even if the rate exceeds the rate set forth in Section 56-8-11 NMSA 1978.
D. In addition to the maximum interest or discount which a lender is permitted to charge by law the lender may charge, take, reserve or receive a premium or points in an amount up to but not exceeding three percent of the face amount of the loan on interim construction loans. The lender may charge and require the borrower to pay the premium upon execution of the loan agreement whether the proceeds are delivered to the borrower immediately or whether there are to be obligatory or permissive future advances. The lender shall not be required to refund this charge in the event of prepayment of the obligation. For the purposes of this section, an interim construction loan means a loan secured by a first mortgage and used by the borrower primarily for financing the construction of buildings, structures or improvements on or to the real property on which the first mortgage has been taken.
E. A lender may charge, take, reserve or receive points or a premium on any loan secured by real property provided the points or premium together with the interest or discount charged, taken, reserved or received do not exceed the maximum interest or discount permitted by law. The lender shall not be required to refund this charge in the event of prepayment even if the prepayment would result in a higher charge to the borrower than permitted by law.
56-8-21. Usury; corporations and limited partnerships.
A. No corporation shall plead, enforce a remedy, counterclaim, set off or set up the defense of usury to any action brought against it to recover damages or shall enforce a remedy for usury on any obligation executed by the corporation.
B. No limited partnership, limited partner or general partner of a limited partnership, shall plead or set up the defense of usury in any action brought against it or him on a limited partnership obligation. No limited partnership, limited partner or general partner of a limited partnership shall enforce a remedy for usury on any limited partnership obligation.
C. This section shall apply to a transaction in which a corporation or a limited partnership is debtor regardless of the purpose for which the corporation or limited partnership was formed.