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.
“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. ” said, Marie-France Lalonde, Minister of Government and Consumer Services
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.
If 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
QUICK FACTS
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.
QUOTES
“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. ”
— Marie-France Lalonde, Minister of Government and Consumer Services
