Payday Loan Rules Dismissed in Canada
By Paul RizzoPayday Loan Writer
New rules in several provinces are supposed to protect consumers from sky-high interest rates and fees at payday loan companies, but a consumer lobby group says they will likely won’t prevent the poor from becoming trapped by crushing debt.
Manitoba has become the latest province to unveil detailed rules that payday loan companies will soon have to follow. Regulations will require payday loan companies to post large signs near their doorways that detail the full cost of borrowing $300 for two weeks.
The signs must reveal the loan rate and fees and read in large letters Payday Loans are High-Cost Loans.
The aim, the province says, is to make borrowers more aware of how much they are paying for quick cash advances.
“That will make them in a position to make a more informed decision as to whether they want to take out the loan,” said Donna Tardi, manager of dispute resolutions with the Consumers’ Bureau branch of Manitoba’s Finance Department.
“It also would allow them to check out the cost from location to location and then decide which business they want to deal with.”
But the Consumers Association of Canada says this will not deter low-income earners, who cannot get credit at the big banks and therefore need instant payday loans.
The real answer, says vice-president Mel Fruitman, is to enforce the maximum interest rate under the Criminal Code — 60 percent a year.
