New payday loans act provides stronger protection
McGuinty Government Takes Action To Ban Controversial Lending Practices
In a continuing effort to protect Ontario consumers in need of short-term loans, the Act also includes an enforcement regime of inspections, prosecutions and licence suspensions, as well as an education campaign to help consumers make informed decisions.
An independent advisory board of experts, business representatives and consumer advocates will examine the costs for payday loans and recommend a limit on the total cost of borrowing.
The Act requires:
- All payday lenders to be licensed
- Lenders to include all charges consumers are required to pay in the total cost of borrowing
- Lenders to allow borrowers to cancel payday loan agreements during a cooling-off period
- Operators to contribute to a public education fund on payday lending.
- A payday loan is a short-term high-interest loan, typically marketed as easy cash to cover costs until the borrower’s next payday
- There are between 600 and 700 payday loan operators in Ontario
- Payday loan users are younger than the general population and have average incomes ranging from $35,000 to $41,000.
“This new Payday Loans Act is yet another important step the McGuinty government is taking to protect Ontario consumers.”
“This legislation will help shut the door on payday loan businesses that take advantage of poor families’ vulnerability.”