Never used a PD loan company, but found this while searching the Consumer Protection website. Great info there..! About time tougher enforcement is hitting these short-term loan lenders; sick of watching these companies bleed the lower-income folk dry.
From my eyes, the "2 day Cooling Off" period may sting these businesses, as clients can opt out of (pay back) the loan within 2 days without penalty. On the other hand, it could be beneficial for these lenders, too.. It may attract a whole new crowd of customers who first figured they'd 'exploit' the hole and use the service for a day or two; only to learn that this may be a useful service down the road, and thus, again patron the lending establishment another time.
http://www.gov.on.ca/mgs/en/ConsProt/STEL02_178878.html
Payday LendingPayday loans have become increasingly popular since coming to Canada in the early 1990s. Though they offer quick cash when you need it, you may end up paying back more than you anticipated.
New regulations are offering stronger protections designed to provide you with the information you need to make informed decisions about short-term borrowing. These rules will help you develop a better understanding of the costs involved before entering into a credit agreement.
What is a Payday Loan?
A payday loan is a small value, unsecured loan made to a borrower who guarantees repayment with a post-dated cheque or pre-authorized debit. Lenders typically require borrowers to prove three months of continuous employment, produce a recent utility bill in their name to establish address, and have an active chequing account. No credit check is performed.
In Canada, loans typically reach a maximum advance of 50 per cent of the borrower’s net pay. The average loan in Canada is approximately $300 with a term of 10 days to two weeks.
There are approximately 1,350 stores operating in Canada, with 700 in Ontario
How does Ontario protect consumers of payday loans?
Ontario has taken steps to provide additional protection for users of payday loan services.
Starting on April 1, 2009, users of payday loans benefit from stronger consumer protections in the Payday Loans Act, 2008. The legislation:
Requires payday lenders and loan brokers to be licensed starting April 1, 2009.
Prohibits certain industry practices, including “rollover” loans, effective July 1, 2009.
Gives payday loan borrowers a two-day “cooling off” period to cancel a loan with no reason without incurring a penalty, effective July 1, 2009.
Establishes an Ontario Payday Lending Education Fund, paid for by licencees.
The legislation will also set a maximum total cost of borrowing cap for payday loan agreements in Ontario of $21 per $100 borrowed, as recommended by Ontario’s Maximum Total Cost of Borrowing Advisory Board.
Learn more
News release: Ontario Protects Payday Loan Users - March 11, 2009
Payday Loans Act, 2008 and regulations.
Payday lenders and loan brokers’ licences
Read more about consumer's Payday Loans Bill of Rights.
The Maximum Total Cost of Borrowing Advisory Board’s report on an upper limit to the total cost of borrowing for payday loan agreements in Ontario.
The Cost of Providing Payday Loans in Ontario (PDF), report prepared by Ernst and Young