VANCOUVER (NEWS1130) - The B.C. government is changing payday loan regulations so that consumers in need of money are protected from excessive charges.
Starting November first, payday loan companies will have to be upfront and clear about their lending policies. Lending contracts will not include legal jargon, like in the past. To further protect consumers from excessive fines, roll-over fees will be eliminated and lenders will have to work with customers to arrange payments, instead of using traditional collections' practices.
Scott Hannah of the Credit Counseling Society says it's very important you know what the cost of your loan is and what the late fees are before you borrow. "Well what we've seen in the past is that many of these loan agreements were very convoluted, difficult to understand and had a lot of hidden language and legal language within the body of the contract. Quite frankly, most people didn't read it."
Interest rates and fees from payday lenders will be capped at 23 per cent and lenders will not be allowed to give out more than half of the borrower's actual pay. Under the new laws the loan may be cancelled by the customer by the end of the next day without penalties. Payday loan companies will also have to obtain licensing from the Consumer Protection Branch before lending.
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