The Alberta government has put an end to predatory lending, by changing the payday lending rates province wide.
Alberta now has the lowest payday lending rate in Canada, reduced from $23 for every $100 borrowed to $15 for every $100. The highest rate in Canada is $25 for every $100 borrowed in Prince Edward Island. The changes took effect on August 1, and are the first phase of An Act to End Predatory Lending legislation. All fees related to a payday loan must be included in the cost, putting an end to hidden fees and charges for Albertans.
The changes mean that payday lenders will no longer be able to charge a fee to cash a payday loan cheque, solicit directly by email or phone, or offer a loan when another is outstanding. The government will also encourage banks and community groups to offer alternative, short-term loans.
First Calgary Financial and Chinook Financial are the first to launch the new alternative micro-loan program in Alberta on August 22, with an annual interest rate of 19 percent and a payback period of six to 18 months. The cost over two weeks is 73 cents per $100 borrowed.
“It’s credit with reasonable rates, longer payback terms and financial literacy supports that set Albertans up for financial health, not ruin.” said Stephanie McLean, Service Alberta Minister in a statement.
Shelly Vandenberg, the President of First Calgary Financial, is pleased with the steps taken to help Alberta’s financially vulnerable. “Our Cash Crunch Loan will be the first of its kind in the province and will prevent people from reaching financial instability.”
The Government of Alberta consulted with Albertans about payday loan regulations in October 2015, with 84 percent of respondents saying allowable borrowing costs were too high.
Currently more than 30 payday loan companies operate more than 220 branches in Alberta.
With files from CTV Calgary
