New Payday Loan Rules Take Effect This Weekend

Friday, October 30, 2009 03:50 AM

Prince George, B.C.- New rules for payday loans come into effect on November 1st.

A payday loan is less than $1,500 borrowed for a maximum of 62 days, and is not secured. The borrower provides a post-dated cheque or pre-authorized debit form to repay the whole loan at the end of the term,
usually the next payday.

B.C.'s Business Practices and Consumer Protection (Payday Loans) Amendment Act and the Payday Loans regulation prohibit lenders, including phone and Internet lenders, from:

* Practices that unreasonably increase the borrower's debt load, including rollovers that require borrowers to pay significant extra fees for extending the time to pay a loan.
* Requesting an assignment of wages, or collecting from a borrower's employer.
* Charging more than 23 per cent of the amount borrowed in interest and fees.
* Lending more than 50 per cent of a borrower's take-home pay or requiring repayment before the borrower's next payday.
* Operating unless licensed by Consumer Protection B.C.

As well, borrowers will have the right to cancel a payday loan by the end of the following day without charge by returning the money borrowed. Payday lenders must display rates and fees, and Internet and
phone lenders must make rates and fees known to borrowers.

Compliance and enforcement will be administered by Consumer Protection BC, a not-for- profit organization that operates at arm's length from
government. (It was previously named Business Practices and Consumer Protection Authority.) Information for borrowers and lenders is at www.ConsumerProtectionBC.ca.

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Posted on Friday, October 30, 2009 03:50 AM in News by 250 News

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Comments

Posted by: MrPG on October 30 2009 8:12 AM

Good to see a little heat on these legal loan shark operations.

Posted by: CaringSoul on October 30 2009 8:24 AM

I think a cap should be put on the interest charged. I believe that 23% is to high. Credit card companies and these payday loan places should not be allowed to charge more than 10% IMO.

Posted by: MrPG on October 30 2009 8:52 AM

I agree that 23% is too high, the best solution is not to use Payday Loan companies and to pay your credit card off in full every month.

Posted by: CaringSoul on October 30 2009 9:33 AM

lol That is for sure Mr. :}

Posted by: Outwest on October 30 2009 3:32 PM

I was looking for the right Word and I found it " Parasites".

Posted by: caranmacil on October 30 2009 6:14 PM

23 percent includes fees as well as interest. That sounds like a lot but i suppose it wouldnt be that unreasonable if you were borrowing 50 bucks or so. I am a little surprised to learn though that i can now get an overnight (1 day loan) free of charge! Thats going a bit far if you ask me. Try that with a bank sometime (they all seem to have fees of one sort or another).
While usery is bad, going to a loan shark, like gambling is voluntary. So too is credit card debt. If you dont want to pay the interest, dont go into debt. That would seem straight forward to me. Are we advocating now to protect people from every possible manifestation of their own stupidity?

Posted by: caranmacil on October 30 2009 6:16 PM

Oh yeah, i can also see a reduction in the types of loans available in order to remain profitable under the new rules. I guess folks might just have to : A: stay home and wait for payday or B: go to a loan shark ( a real one).

Posted by: Eagleone on October 31 2009 3:38 AM

This is good news... they should look into how some of the lease companies are operating as well IMO.