THUNDER BAY – “Our government is committed to protecting consumers and helping people in their everyday lives. This includes lowering the cost for taking out a payday loan, and further changes to ensure that financial services are fairer and more transparent for all, ” says Marie-France Lalonde, Minister of Government and Consumer Services.
Ontario is lowering the maximum total cost of borrowing for a payday loan from $21 to $18 per $100 borrowed as of January 1, 2017. Payday loans are a commonly used financial service in Ontario, and this change will ensure consumers are better protected and able to benefit from lower costs for each loan.
The annual rate of interest on payday loans is massive, the steps by Ontario have been in the works for some time.
Ontario has also introduced legislation to strengthen protections for consumers who use financial services such as payday loans, instalment loans, rent-to-own services and cheque-cashing services, as well as for consumers who have debts in collection.
Once passed, the Putting Consumers First Act, would increase protections for consumers in several new ways, including:
- A grace period for repayment for consumers using rent-to-own services
- An extended repayment period option for consumers who are repeat payday loan borrowers
- Establishing standards or factors that payday lenders must take into account when determining a borrower’s ability to repay
- Restrictions on high-frequency borrowing
- Adding and improving compliance and enforcement powers to address unlicensed lenders and loan brokers
Strengthening consumer protection is part of our plan to create jobs, grow our economy and help people in their everyday lives.
- Alternative financial services are any financial service offered by a party other than a bank or a credit union.
- There are over 800 licensed payday lenders and loan brokers in Ontario.
- The majority of calls and inquiries to the Ministry of Government and Consumer Services are about debt collection.