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Changes On Charges To Payday Loans

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Victoria – New, lower charges for high-cost, short-term cash loans – payday loans – came into effect January 1, 2017.

The maximum allowable charge – including all fees – for a payday loan in British Columbia is $17 for every $100 borrowed, making it the second-lowest rate in Canada.

Lowering the total allowable charge to $17 from $23 builds on regulations the Province implemented in 2009. Before then, borrowers paid whatever the lender charged – as much as $30 per $100 borrowed, and had limited protections and recourse against harmful lending practices.

  • A payday loan is a loan of $1,500 or less for a term of 62 days or less.
  • Typically, borrowers have a bank account and a regular source of income. They provide a cheque or pre-authorized debit for the full amount of the loan, plus fees, to be repaid on their payday.
  • Payday loan companies doing business with B.C. consumers, including those operating online or by phone, must be licensed by Consumer Protection BC.
  • British Columbia’s laws provide a number of protections to payday loan borrowers including cancellation rights, disclosure requirements, prohibited practices and penalties for violations.
    • Payday lenders must publicly display the cost of credit, and disclose all charges, terms and conditions in the loan agreement.
    • They must not roll over one loan into another with new charges, nor issue more than one loan to a borrower at the same time.
    • A payday lender cannot issue a loan for more than 50% of a borrower’s net pay for the period over which the loan is written.
    • If a borrower is taking out his or her third loan in a two-month period, repayment must be phased over two or three pay periods
  • Through Consumer Protection BC, people who have been overcharged for these loans have recourse against the companies. Since 2012, several payday loan companies have been ordered to refund a total of more than $1 million to consumers who were overcharged.
  • Almost 159,000 British Columbians took out payday loans in 2015 according to information provided to Consumer Protection BC by the payday loan industry.

Learn More:

Consumer Protection BC:

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