TORONTO – A public watchdog group warns some Ontario consumers could be caught in a never-ending cycle of borrowing from payday loan companies.
Starting Tuesday, Ontario will allow payday loan firms to charge a maximum of $21 for every $100 borrowed.
The Ottawa-based Public Interest Advocacy Centre says that’s an “astronomically high” rate that will do more to protect the payday loan companies than consumers.
Spokesman John Lawford says it works out to about 700 per cent annually for a 10-day loan, and predicts some people will end up taking eight or ten such loans a year.
Lawford says most of the $2 billion a year borrowed from Canadian payday loan companies is done so by repeat customers who can’t get ahead of their debts.
Manitoba allows companies to charge a maximum of $17 dollars per $100 borrowed, British Columbia and Saskatchewan allow charges up to $23, while Nova Scotia’s maximum is $31 for every $100 borrowed.