Government officials in Manitoba and Ontario are calling for increased regulations on pay day loans. These tighter regulations are a result of what they consider to be a way around the legal limits payday loan companies can charge.
In Manitoba, payday lenders can only charge 17% in interest and fees over the life of the loan. In British Columbia, these charges are capped at 23%. And in Ontario, lenders cannot charge more than $21 in interest and fees for every $100 borrowed.
Even with these laws in place, payday loan companies have found a way to continue to charge hidden fees. Recently in Manitoba and Ontario, the Cash Store, one of the largest providers of payday loans, stopped offering payday loans and started offering lines of credit instead. However, customers who take out lines of credit are charged 24.5% in fees and interest, more than the 17% and 23% caps that were in place for payday loans.
The government is seeking to revoke the Cash Store’s license completely to prevent them from what they consider to be taking advantage of people who are already in financial trouble.
Avoiding payday loans
Some alternatives to payday loans include:
- Building up a savings account for emergencies
- Borrow from friends or family instead
- Sell items around your house to cover an emergency expense
- See if your employer can offer a payday advance
If you are already caught up in the payday loan trap and don’t know how to get out, there are options available. The best thing to do is speak with a certified bankruptcy trustee. They can go over your situation with you and tell you the best option for you.