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.”




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