Payday loan users can expect to pay no more than $23 for every $100 they borrow under new rules proposed by Alberta’s government.
“What is chosen today is ultimately for the consumers,” said Service Minister Heather Klimchuk after unveiling the new plan to reporters yesterday in the legislature.
The average payday loan company would charge $30 for every $100 borrowed, according to a consultation report from the government.
And in some cases, businesses would charge as high as 50 per cent, said the report.
Calgarian Kristine Strong is pleased with the news. Earlier this year, she had missed a payment on a $280 loan and she alleges the company tried to garnish her wages illegally, and somehow accessed her bank account.
“I never gave them my bank information so I don’t know how they got it. They actually withdrew almost a grand from my account, but the bank reversed it when I told them what happened,” Strong said.
“I just couldn’t believe they tried to get away with something like that,” she added.
Stan Keyes, president of the Canadian Payday Loan Association, said the new cap would separate the good companies from the “irresponsible” ones.
“There is no doubt that many businesses will have to change their business practices to tighten their belts,” said Keyes. “If they don’t, they will be out of business.”
Payday loan companies must also offer two-day cooling off periods to consumers who want to return money without any costs.
All payday loan businesses must also be licensed by the province under the proposed law.
The new rules that come into effect on Sept. 1 would also put an end to “rollover” loans, something a consumer would use to pay off an old payday loan.
Payday loan users can expect to pay no more than $23 for every $100 they borrow under new rules proposed by Alberta’s government.
“What is chosen today is ultimately for the consumers,” said Service Minister Heather Klimchuk after unveiling the new plan to reporters yesterday in the legislature.
The average payday loan company would charge $30 for every $100 borrowed, according to a consultation report from the government.
And in some cases, businesses would charge as high as 50 per cent, said the report.
Calgarian Kristine Strong is pleased with the news. Earlier this year, she had missed a payment on a $280 loan and she alleges the company tried to garnish her wages illegally, and somehow accessed her bank account.
“I never gave them my bank information so I don’t know how they got it. They actually withdrew almost a grand from my account, but the bank reversed it when I told them what happened,” Strong said.
“I just couldn’t believe they tried to get away with something like that,” she added.
Stan Keyes, president of the Canadian Payday Loan Association, said the new cap would separate the good companies from the “irresponsible” ones.
“There is no doubt that many businesses will have to change their business practices to tighten their belts,” said Keyes. “If they don’t, they will be out of business.”
Payday loan companies must also offer two-day cooling off periods to consumers who want to return money without any costs.
All payday loan businesses must also be licensed by the province under the proposed law.
The new rules that come into effect on Sept. 1 would also put an end to “rollover” loans, something a consumer would use to pay off an old payday loan.
with files from jeff cummings
