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Payday loans in B.C. are now slightly cheaper, after regulations limiting the amount of money short-term cash lenders can charge went into effect.
As of Jan. 1, the maximum amount of money lenders can charge for payday loans is $17 for every $100 borrowed. That’s a drop from $23 for every $100 borrowed, and brings B.C.’s rates down to the second lowest in the country.
The changes are part of a set of regulations the provincial government first introduced in 2009, when payday loan lenders were charging as much as $30 for every $100 borrowed.
A payday loan is a loan of $1,500 or less, taken out for a term of 62 days or fewer.
Payday loan lenders usually give the loans to people with a bank account and regular source of income. Upon getting the cash, the borrower usually has to write a post-dated check to the lender for the full amount of the loan, plus all the fees, to be cashed once they are paid.
Along with lowering the cost of these types of loans, the provincial regulations also beefed up protections for borrowers against harmful lending practices, including cancellation rights, disclosure requirements, prohibited practices and penalties for violations.
"High-interest payday loans often threaten to trap people in a vicious cycle of debt. These changes by the province are an important step forward for protecting working families and vulnerable people in British Columbia,” said Maple Ridge councillor Tyler Shymkiw.
According to information from Consumer Protection BC, almost 159,000 British Columbians took out payday loans in 2015,
That number was down slightly from 2014, when a report by the Vancouver City Savings Credit Union pegged the number of people using payday loans in B.C. at 198,000, more than any other province in Canada.
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