Ontario introduces to cap Interest and Fees on Payday Loans


 

Ontario introduces to cap Interest and Fees on Payday Loans

 

July 18, 2020

Global Korean Post

 

 

Payday loans are the most expensive form of consumer loans in Ontario.

 

The Ontario government is proposing changes that would provide additional protection for payday loan borrowers by capping interest rates and fees on defaulted loans, ensuring that workers and families who use payday loan services can keep more of their hard-earned money. The changes were included in the COVID-19 Economic Recovery Act, 2020.

 

 

Proposed amendments to the Payday Loans Act, 2008, would cap the interest rate that lenders can charge on payday loans that are in default. Lenders would not be permitted to charge interest in excess of 2.5 per cent per month (non-compounded), providing rate relief to borrowers unable to repay their loans on time.

 

The government would also establish a maximum fee of $25 that may be charged by lenders for dishonoured or bounced cheques or pre-authorized debits. This measure would protect borrowers from having to pay high fees while already facing financial hardship.

 

Ontario would join six Canadian jurisdictions that have similar maximum interest rates on payday loans in default, including British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, and Newfoundland and Labrador.

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