Payday Loan New Rules Nov 1, 2009 For BC, Canada
New rules for payday loan companies take effect in British Columbia on November 1, 2009.
A payday loan is usually less than $1500 borrowed for up to 62 days,and it is unsecured debt. The borrower is usually asked to provide a postdated cheque or a preauthorized debit form from their bank to repay the whole debt at the end of the term.
The new rules prohibit lenders - storefront, phone and internet lenders from:
1. Requesting an assignment of wages, or collecting from a borrower's employer (this is great for consumers)
2. Charging more that 23 per cent of the amount borrowed in interest and fees
3. Lending more than 50 per cent of the borrowers net income (take home pay) or requiring repayment before the borrower's next payday
4. Operating unless licensed by the Consumer Protection BC
5. Practices that unreasonably increase the borrowers debt load, which includes rollover loans that require the borrower to pay larger fees for extending the time frame to pay a loan
Also new the borrowers will now have the right to cancel the payday by the end of the following day without charge by returning the money borrowed. Payday lenders must display rates and fees, and Internet and phone lenders must make rates and fees known to borrowers.
Finally one for the little guy!
According to many people I have spoken with, those who use Payroll loan companies think they provide a valuabled service and it is hoped this will help both the industry and those who use the service.
Good one BC!