Ontario is seeking public input on how much borrowers should pay for a payday loan in the province.
In Ontario, the maximum cost of borrowing for a payday loan is currently $21 per $100 borrowed. This is the second lowest cost of borrowing in Canada, but ranks among the highest when compared to other North American jurisdictions.
The government has issued a report to consult on the current total cost of borrowing a payday loan and three proposed alternatives:
- $15 per $100 borrowed
- $17 per $100 borrowed
- $19 per $100 borrowed
Starting today, Ontarians can provide feedback by going online until May 20, 2016.
This consultation will help inform important work underway on proposed legislation introduced in December 2015 made under the Alternative Financial Services Statute Law Amendment Act. If passed, the act would increase consumer protections for users of payday loans, instalment loans, rent-to-own services, cheque cashing services and consumers with debts in collection by proposing longer grace periods for repayment or caps on borrowing rates.
“Our government is committed to creating a fair, safe, and informed credit market in Ontario, and that includes exploring new ways to ensure consumers have access to alternative credit and financial services without being subjected to harmful practices. We want to hear what you think about the cost of borrowing in the province, so that we can continue to protect consumers while ensuring Ontarians still have choices when it comes to credit and borrowing.” — David Orazietti, Minister of Government and Consumer Services
Protecting Ontario’s consumers is part of the government’s economic plan to build Ontario up and deliver on its number-one priority to grow the economy and create jobs. The four-part plan includes investing in talent and skills, including helping more people get and create the jobs of the future by expanding access to high-quality college and university education. The plan is making the largest investment in public infrastructure in Ontario’s history and investing in a low-carbon economy driven by innovative, high-growth, export-oriented businesses. The plan is also helping working Ontarians achieve a more secure retirement.
- Ontario has over 800 payday lenders and loan brokers.
- The average payday loan in Ontario is $435 over 16 days.
- Manitoba has lowest cost of borrowing in Canada for payday loans at $17 per $100 borrowed.
- Know your rights on payday loans
- Read about the Payday Loans Act
- Learn about the Alternative Financial Services Statute Law Amendment Act