Big Changes Coming to Payday Loans in Mississauga and Beyond

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Posted on December 27, 2017 at 2:24 am

It’s no secret that the cost of living in Mississauga is hard to track, and it seems like there is a payday loan store on every corner. If you are borrowing money from alternative financial services like payday loans, or worrying about how vulnerable consumers are often exploited, there are changes coming to the system that you will want to know about.

Essentially, the province is reducing the cost of borrowing payday loan money.

Effective January 1, 2018, the cost of borrowing limit for payday loans will be lowered to $ 15 per $ 100 borrowed. Currently, the limit is $ 18 per $ 100 borrowed. In 2016, the limit was $ 21 for every $ 100 borrowed.

While it appears that payday loan stores are growing – and rapidly – municipalities will also be able to control which area payday loan stores open and how many can operate in a given area starting in the new year. .

A few more changes are on the horizon, which will take effect in mid-2018, July 1.

These include that the fee for cashing a government-issued check will be capped at $ 2 plus 1 percent of the face value of the check, or $ 10, depending on what’s left over.

Did you know that currently, there is no cap on these fees?

In addition, changes are occurring in the amount that lenders can lend – they will only be able to lend up to 50% of a borrower’s take-home pay.

If a borrower takes out three or more loans in a 63-day period, borrowers will also have the option of an extended payment plan.

That’s all well and good, but there is no doubt that these borrowers are among the most financially vulnerable in our city.

“We’re trying to better educate people so that they don’t actually need these very expensive services,” said Gerald Cossette, chairman of the board of directors of the EBO Financial Education Center, in a recent statement. “But for those who still need it, there is no doubt that the changes in government will help.”

If you’re curious, payday loan and check cashing stores maintain higher fees than traditional banks and credit unions, and offer services outside of them.

“For example, the cost of borrowing a $ 300 payday loan is currently capped at $ 54 over a two-week period,” the province said. “In comparison, a typical credit card with an annual interest rate of 23% and a service charge of $ 3.50 would cost $ 6.15 over the same period.”

Borrowers are typically required to repay their payday loans two weeks after borrowing the money.

While payday lenders are already required to display in-store information comparing the total cost of borrowing payday loans to lines of credit and credit cards, it is hoped that these new rules will further increase transparency and will better protect anyone who has to turn to payday loans and checks. collection services.

For more information on payday loans, click here.

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