New B.C. regulations on payday loans don’t address real issues: advocates

Despite lower maximum charge on borrowing, groups say rolling over loans and lack of education still a concern

Money Mart, Cash Money, Cash Now. Payday loan business line streets across the province, providing easy, short-term borrowing – at a price.

That price is now lower, following provincial regulations that came into effect Jan. 1. The maximum charge per $100 borrow is now $17 down from $23, putting it below an average credit card interest rates, which rarely go under 17-19 per cent.

B.C. now has the second lowest rates in Canada, behind only Manitoba, but they’re still not low enough.

That’s according to Melody, a New Westminster woman who did not want her last name published, who uses payday loans and is a member of BC Acorn, a group that fights for lower fees and better regulation for short-term loans.

She said by the time someone needs a payday loan, every cent counts. The group has fought for a $15 maximum charge, and while they’re happy that the government is doing something, they want more.

“That $2 makes a big difference when you already need a help,” she said.

Payday loans are short-term loans of less than $1,500 and have to be paid within 62 days, although most businesses deduct payment from the borrower’s next paycheque.

Although Melody doesn’t use them often, she has used them twice this year and said it could become a regular thing. Her budget takes a hit when family comes to visit in the summer and again during the Christmas holidays.

“I had to get a payday loan about 10 days ago,” said Melody, who gets gets $931.42 in disability payments each month.

“It’s not because I don’t know how to budget. I do know how to budget. We just don’t get enough on disability – we’re still below the poverty line.”

A Financial Consumer Agency of Canada report found that the number of Canadians using payday loans more than doubled from 2009 to 2014 — from 1.9 per cent to 4.3 per cent.

The report also found that payday loan users have less access to other kinds of loans than the average Canadian. Only 35 per cent of them have access to credit cards, with 12 per cent can get lines of credit, compared to 87 per cent and 40 per cent, respectively, among other Canadians.

BC Acorn also believes more regulation is needed to prevent people from “rolling over” their loans from lender to lender. Currently, B.C. has no database that lenders can use to see if borrowers have outstanding loans from other lenders.

Credit Counselling Society vice-president Gary Tymoschuk said a need for constant payday loans becomes a “vicious cycle,” and that people should turn to credit counselling groups to get help instead of relying on continual payday loans.

He said the real issue is a lack of education.

“People who are going for payday loans are more of the vulnerable members of our society and probably don’t know some of the other options.”

 


 

@katslepian

katya.slepian@bpdigital.ca

Like us on Facebook and follow us on Twitter.

 

Just Posted

Over thirteen percent of Bella Coola residents rely on Food Bank

Demand for Christmas Hampers up by 45 families this year

Site C dam goes ahead, cost estimate now up to $10.7 billion

Premier John Horgan says Christy Clark left him no other choice

Verdict to be delivered December 15 for three on trial in Anahim murders

The fates of Christian Craciun, Andrew Jongbloets, and Serena Rhem (Mack) will be decided on December 15 at 10am.

‘I fell asleep’ admits second mate in Nathan E. Stewart fuel spill

The tug spilled more than 100,000 litres of diesel off B.C.’s northern coast

Northwest’s new MRI hits milestone

Stakeholders celebrate 500th scan of diagnostic imaging device

VIDEO: New series takes in-depth look at sexual harassment in B.C.

Black Press takes a hard look at sexual harassment in B.C.

Horgan says pot smokers may face same outdoor rules as cigarette smokers

B.C. is developing its rules on recreational marijuana

Truck driver volunteers to take dog lost in B.C. back home to Alberta

Frankie, a pit bull service dog, was found wandering in the Lower Mainland

B.C. teacher suspended after explicit images projected to class

Jeffrey Rohin Muthanna had been viewing porn on a school laptop for two years

Man who pledged to give B.C. hockey team millions charged with fraud

Mike Gould has since repaid $8,000 he allegedly owed Cranbrook restaurant, owner says

Strong economy fuels housing sales in B.C.: report

Economist says demand for houses is being supported by a large number of millennials entering the market

Tequila, hammers and knives: what not to bring on an airplane

Vancouver International Airport staff provide tips on travelling during the holidays

New fighter-jet competition to have national ‘economic interest’ requirement

Trudeau government wants to replace Canada’s aging CF-18s with 88 new fighters by as early as 2025

The top-binged shows on Netflix in 2017

Which show did you cheat on your spouse with by watching ahead?

Most Read