Alberta Payday Loan Rates Lowest in Canada Under New Law
The law that came into effect this month makes loan rates for payday loans in Alberta the lowest in the country, according to the provincial government.
Payday loan companies can charge a maximum of $ 15 per $ 100 borrowed, under the End Predatory Lending Act.
Before the law came into effect, businesses could charge $ 23 for every $ 100 loan.
“Last fall Albertans told us they wanted lower interest rates and stronger consumer protections,” Service Alberta Minister Stephanie McLean said in a statement Tuesday.
“Today is the law. We ended predatory 600 percent interest rates and vicious debt cycles with fair rules that protect Albertans.”
Prince Edward Island allows the highest interest rates, with lenders allowed to charge $ 25 on a $ 100 loan.
Lenders can charge $ 23 per $ 100 in British Columbia and Saskatchewan, $ 21 in Ontario, and $ 17 in Manitoba.
Under Alberta’s new law, lenders are now prohibited from offering a loan when another is already in progress, charging a fee to cash a payday loan, or soliciting directly by email or phone. .
The law also calls on the province to encourage financial institutions and community groups to offer short-term loans as an alternative to payday loans.
First Calgary Financial and Chinook Financial are expected to launch programs later this month that will offer 19% interest micro-loans with a repayment period of six to 18 months.
“I am very pleased that First Calgary Financial is launching its Cash Crunch loan on August 22,” said McLean.
“It’s credit with reasonable rates, longer repayment terms and financial literacy supports that prepare Albertans for financial health, not bankruptcy.
The Cash Crunch Loan Program was created in conjunction with Momentum, a group that provides personal money management training to low-income Calgarians.
A loan is considered a payday loan if it is $ 1,500 or less with a term of 62 days or less.
More than 30 payday loan companies do business in Alberta at more than 220 branches, depending on the province.