Alberta Joins Payday Loan Regulation Bandwagon

Mon, 08 Jun 2009

The Canadian province of Alberta has introduced legislation which will restrict payday lenders to charging interest rates and fees of $23 on every $100 borrowed. With most lenders charging over 30 per cent returns on short-term loans, the new legislation will take effect on September 1st following years of consultations. That fee still represents an annual interest rate of over 600 per cent, but is an improvement on existing conditions.

Following the lead of a number of states in the neighbouring USA, the Albertan government will ban lenders such as Money Mart from offering rollover loans, designed to pay off existing payday loans or from factoring fees into a loan . Borrowers will have a two day period in which they may cancel the loans, whilst the conditions of each loan must be clearly advertised.

Alberta has become the fifth province to introduce payday loan regulations, matching the $23 cap in British Columbia. Other limits range from $17 per $100 to $35 in Quebec, rendering their provincial regulations useless.

Payday lending has surged in popularity in Alberta in recent years, and there are now 232 payday lenders in Alberta alone. Lenders are being warned that there will be regular checks that they are abiding by the new laws.
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