Your View

There seems to be a problem with 60%, on short-term, high risk loans this is not beneficial to the business. Say you need $200 and want to pay it back in 7 days, at 60% interest, you would therefore have to pay back your $200, plus about $2 interest. Considering the paperwork involved, verifying who the person it, paying employees and so forth. There is no benefit to a business to do all this work for $2. Also when you consider some of these loans are for even smaller amounts like $40 or $50. A week's interest for be around 50 cents. Now considering each loan takes an employee about 20 minutes to do all the needed paperwork and so forth, how can making 50 cents profit off this, be worthwhile?

The Gov't should regulate max. Int. rates no differently than what clients pay at Dept. stores eg. int. rates at 27% per annum. This is a 2 billion dollar industry & if they can't make a profit on society's most vunerable at that rate then shut down the companies.

I find it interesting how many comments suggest that the clients are more than just the perceived lower income groups. Who uses the pay-day loan companies is immaterial - to suggest otherwise is to accept that gouging upper income groups is somehow acceptable. Gouging is just that, be it to lower or upper income. We would be up in arms if our bank system were to charge interest rates of 60% + and more, and so we should be with pay-day loan companies These companies should be strictly regulated and a legal reasonable limit on interest rates charges must be enforced.

I think many people have a misconception as to who patronizes money-lending establishments. The client base is very diverse and includes high-salaried individuals like doctors and lawyers. The industry caters to both those down on their luck as well as those that have poor money managing skills.

For those that are in hard times, it's obvious they need other options than to dig deeper holes through high-interest borrowing. Full disclosure is great but if their only option puts them at a further disadvantage, it's not much of an option at all.

For the latter, it's difficult for me to have much sympathy for them. Spending choices have their consequences. I, for one, earn an average income and I try my best to live within or beneath my means.

Payday loans have saved me several times... however, in the big picture, they did contribute in a major factor to my downward financial spiral.

They do provide a great service for people who don't qualify for credit and are having hard times. I do believe however, how much they charge is out of whack. Some places are reasonable-ish, but others I've been to had charged up to $27 for each $100 you wanted to borrow for two weeks.

It gets to be a hard hole to dig yourself out of if you go week after week.

Keep a good credit rating and the bank will be more than happy to give you a line of credit to cover that $200 or $5000 or whatever. All you need is a long history of paying bills on time. Everyone should learn the high value of a good credit record, from the time of high school, at the latest.

At 60% the companies would be charging double what a credit card charges! I realize they charge in effect much more with the fees -- repeating fees -- and many companies do conceal the details.

Even my mortgage broker concealed a BIG fee to me when I asked her the cost of a feature on my property deal. She didnt't tell me the fee SHE was getting. I am not that foolish about money. I asked. She lied. Later it was too late.

When the same happens to someone who desperately needs a small amount like $200, it pushes them into further hardship. People should be protected against that. Freedom to have an unnecessary disaster is not freedom.

Most people don't even understand their credit cards, never mind these payday loan scams. I've seen some of these cases in court -- very scummy business behaviour was evident.

I am at the local library using this computer.
Alot of you people have some pretty strong opinions about what others can and can't do.

You tell me this, you don't get paid for 3 days, and don't have a thing to eat, your son
has nothing to eat. You don't have enough money to take the bus to work, 20 km away.

What are we suppose to do, walk 20 km to work
eat grass?

Sometimes you have to bite the bullet and go to moneymart, pay the fees, but at least you eat

I feel that the payday loan industry should be regulated. As long as the Government is careful to balance the needs of the business with the costs charged to the client.

How much interest I get charged for a loan don't bother me as long as I have full disclosure of what I'm agreeing to. Then I have the choice to accept the loan or not.

We live in a fast food society and the reality is that we don't sit down and read what we're signing and agreeing to. We let the sales people pressure or we don't have the patience to read. Are our lives to busy to take a few extra minutes to read the disclosure thoroughly? Pathetic.

How many people out there actually know the details of the credit products they sign. I bet the percentage would be very low. People just sign the docs and then complain once they realize what they've agreed to.

Ignorance is not an excuse these days. If you sign it without reading the disclosure then that's your issue to deal with. I only have an issue when disclosure is not provided. Then I have an issue. So as long as the government regulates the disclosure like the FCAC does to he banks then everything should be ok.

Blaming payday loan companies is just another excuse for people's ignorance. Our society needs to smarten up

Paul

What about these companies with their
no payments, no interest for 90 days?
Lots of electronic retailers, or furniture stores offer this service.

I just bought a small $100 item from an electronics store, and the sales clerk told me about their great promotion, no payments or interest for 90 days. He told me I could just take it, and pay the full amount in 90 days, and it wouldn't cost a thing.

Only when I started filling out the paperwork did I notice the $50 admin fee, which didn't make this a great deal at all!! At least these loan companies are upfront, and explain to clients what they are going to pay. Some retailers are quite crafty at trying to hide their fees, or use salesmanship to try to trick clients.

The salesman I had just played dumb when I told him I thought the $50 admin fee, on a $100 item was not in my best interest. I told him how paying with my credit card, would be around $4-$5 interest after 90 days, bringing the total price to $104-$105. I told him their promotion would cost me $150. He just kept on and on, about how they are interest free.

As is commonly known, interest rates alone do not correctly reflect the cost of borrowing given the various fees etc. charged by lenders. Hence, a new yardstick needs to be introduced to help borrowers understand unequivocally the cost of borrowing. Perhaps we could call this the "Loan Factor".

Governments across Canada should adopt a uniform definition of the "Loan Factor" and implement measures to ensure strict compliance. Failure on the part of lenders to comply should result in indefinite suspension of their business licenses, fines, and the disqualification of company principals from participating in the financial services industry.

Certainty and severity of punishment is necessary to ensure success. Otherwise, like drug dealers, lenders will simply treat legal action as an acceptable cost of doing business.

In conjuction with a Loan Factor, there should be one common medium (e.g. a newspaper or website) where all Lenders should be required to post their offerings and compete for business.

Borrowers will then be armed with the ability to make an "apples to apples" comparisons: e.g. the lower the Loan Factor the cheaper the cost to borrow. Surely competition cannot hurt the borrower.

I think that the payday loan industry does serve a purpose. The problem is not with the majority of the loan operator's, but with the users of the service. A lot of these people come in take out a loan to buy things that are not a necessity, pay their fees. Then go in pay off and then borrow the same if not more money than previously.

These people are told up front and sign multiple papers stating how much they are paying in fees and interest. Those that complain do not have the right as these costs are explained.

They need to understand that this service is not supposed to be a secondary high interest bank account, that you can just complain about and ignore paying when you grow tired of it.

What should be required is a regulation that the industry cannot lend to people on a fixed income or only up to a certain percentage of their income. I do not think that it is right for people on social assistance to get "payday" loans.

This is supposed to be an option for people when they are absolutely stuck. With the way Utility & Insurance company's can "turn you off" or "cancel your policy" and demand more money for a missed payment it is at times a lifesaver. One of these payday loan company's "The Cash Store" actually trains their workers to recognize when a client is in trouble and offer no fee pay-down plans.

However, this industry would not even exist if banks were more open to giving everyday people overdraft protection. My, well a bit more than 2 cents!

The Pay Day Loan industry is a parasite on the poor. It exploits in an unethical and immoral way the desperate financial situations that the poor continually find themselves in.

Rent is the main reason for their financial difficulties because it is a living expense that comprises over 50% of the income of the poor. If you're earning a minimum/poverty wage there is no room for shortages of income in a given month.

The poor often find shortages in their income because most work in minimum/poverty wage jobs that vary in the number of hours of work available each week. Facing the spector of eviction, the poor find themselves willing to pay outragous interest and fees to borrow money.

When the loan is paid back, the userous interest and fees then make the borrower short in covering his/her other living expenses so that the next time rent is due, a poor person finds him/herself going back to the Payday Loan business for another loan. The result is that the poor find themselves paying another tax they can not afford.

By delegating authority to the provinces to regulate the PayDay Loan industry, the Conservative/Elitist class govenment has demonstrated that it is not concerned with helping the urban poor (The scrapping of the Liberal's comprehensive child care program in favor of providing parents with $100/month for child care shows this). Citizens of this country are being abused and are having their legal right not to be charged outragously to borrow money violated; the Federal Government has a obligation to take action on this.

I agree with the current laws, it is unethical to charge people over 60% effective annual interest rate. I believe that an ethical response to payday loans are to se tup up memberships on a monthly basis. For example I ran out of money! They charge me $30 for my $500 loan! next month I require $500 more!! they charge me $30, next month I don't need money, they charge me $30, and so on. The monthly membership could be cheaper to be competitive, maybe $10/month. It could be called the money club!

I was short $200 a few months ago for my rent. If I let my rent cheque goes NSF, both my Landlord and my bank will charge me $35 NSF fee - total $70 !!! Most importantly, it will damage my record with my Landlord.

I took out a $200 payday loan. Cost me $35 but it is well worth it. Which bank can process a $200 loan in 20 minutes??? I can ask my mother for help, but I prefer to pay $35 to keep my affairs private.

The problem is the banks. They keep on increasing bank fees and you will not get much attention, unless you have lots of money that they can sell you insurance, mutual funds etc.

I have been with CIBC for many years, but they still hold my cheques for 5 business days, even though I have no NSF in the last two years.

This forces people to MoneyMart for cheque cashing. Shame on the banks!!!

I'm disappointed in the comments here. Many, many of the comments could also be used equally well to justify loan sharks, extortion, etc. For instance the idea that people should be punished for "stupidity" because they are disadvantaged, panicked or misled.

I know a person who operates one of these payday loan companies. He was a bankrupt not that long ago, but he has figured out how to take advantage of poor people who can't get a bank account (ie. they have no fixed address, for instance) and cheat them out of social assistance payments...so he is a millionaire now.

If Canada is anything like the country I thought it was, we need to help the disadvantaged, not abuse them or encourage others to abuse them. tsk tsk tsk

I hear the freedom of choice argument and the let's regulate argument but I have to say that the last thing I want is to be paying for more people on welfare which is were they will wind up once completely bankrupt, so if folks are too stupid to know better (or too desperate) then we should regulate this to protect ourselves otherwise the rest of us will wind up paying for their problem.

Payday loan is high risks lending. I looked through the financial statements of publicly trading payday loan companies, in Canada and in the US.

Their bad debt ratio is 15-20 times higher than the traditional banks. Therefore, to justify the operating costs for long hours and convenience, they have to charge more to be in business.

No doubt regulation is good.

In the US, each states can set the maximum fee and the number of rollover allowed.

Some states allow loan fees 20% for the first $300, and 15% thereafter, up to $1000. Some states have no maximum, and let the market determine the fee. Some states allow up to 3 rollover, and some states do not.

In Washington State, the loan fee is a flat rate 15% of loan amount ($15 for each $100 borrow) for up to 15 days. No rollover allowed.

Please note this is a flat rate, NOT per annum rate. The borrower pays $15 fee for borrowing $100 for two weeks.

Why are people focusing on the "poor" and "under-educated". There are plenty of people out there that have university degrees in math intensive subjects, that have well paying jobs that do not understand interest rates and finance.

These people have no interest in educating themselves about every aspect of life that they are involved with. People just want to go about thier lives without being cheated, mugged, assaulted, etc.

There are laws to protect people against these other types of criminal activities. This is just one more subject that needs to be addressed.

It's pretty obvious that some people do not comprehend what they are getting to when they get credit or get a loan. The numbers of people going bankrupt might, I hope, be an indicator.

People get over their heads every day because they dont understand the mechanism of of the loan process. I'm sorry but as much as I hate to say it, we do have to protect the stupid, the ignorant, and the inexperienced.

Canadian Law must assure people that when they get a loan or credit that they are not going to be fleeced, taken advantage of, and and in some cases have their lives destroyed.

For each type of load and credit there must be a reasonal maximum interest allowed.

You guys missed the point.

Payday loan companies open long hours and the default rate is very high. If they only charge 60% interest per annum, they will only earn $2.31 on a two week loan.

How can they pay rent? $2.31 cannot even cover the staff's time for processing the loan.

As long as the charges are fully disclosed, consumers have the right to choose.

As a lawyer I am appalled that this continues to go on. If getting short-term loans is such a big problem, the government should institute a solution (similar to student loans, which the banks refuse to provide even with high interest rates).

They can charge a 60-100% interest rate and I'm sure they would break even.

I did the math on Money Mart's website and on a 2-day loan they charge a 4 BILLION PERCENT interest rate. These people are crooks, plain and simple. Charging to cash someone's cheque??? Bizarre.

Imagine paying your home reno contractor or piano teacher with a cheque, and them saying "I'm going to have to charge you 13% of the amount for me to take this cheque to the bank". Insane.

Twice now I have worked for short term loan companies or "payday loan" establishments.

Let me begin by saying that it is not only those with very little money that use the services, it is people of all kinds. I live in a military community and more than half of the clientelle was/is military. Sometimes there is a need and what bank will issue you a short term loan??

I agree however that this needs to become law and be regulated! These places are a disgrace, they rip people off! There is no polite way to say it and I'm ashamed to say that I did work for two seperate establishments that were in this business. Borrow 50 bucks for 30 days and pay back 80?? What the heck is that about?!?! It embarassed me to have to tell people that.

Regulation is required, these people claim that they are NOT making much profit..how so is what I want to know. Lend someone 100 bucks to be paid back in 14 days and make 20 bucks just for doing it..
How disgraceful, make 30 on a 50-dollar 30-day loan and make 20 on 100 for 14 days!!!
and they aren't making any money!!
WHATEVER!

The government needs to take responsibility and correct this somehow!

As long as the fees are fully disclosed, people should have the freedom to choose. If people do not see the value in payday loan, those companies will not be around.

There are a lot of misconceptions on payday loans. I borrow payday loans and I like the company I am dealing with - very convenient and friendly, and it opens late.

A few months ago, I was short $200 for an urgent operation for my parrot. I have no limit left on my credit card. All banks are closed at that time. I got a $200 payday loan in 20 minutes at 8pm !!!

The cost for two weeks is $40. I paid back the loan and I am happy. Thanks payday loan company for saving my parrot !!!

If the 60% interest rate is imposed, those payday loan companies will be out of business, since interest on a $200 loan cannot cover their rent.

I'm surprised not to find mention of the Money Mart scam most obvious to me when I was chronically broke three years ago.

To get a loan against my upcoming E.I. payment, I was asked to name the date on which I would get my payment and pay Money Mart back. I soon realized that in order to avoid the gouging $20-plus "service charge", or whatever they called it, I needed only to tell them the date was one day later than it really was, thus making an "early repayment", or whatever, and paying only the usurious interest.

Therefore, I could borrow $100, say, for two days and pay only 3 or 4 bucks. One MM employee saw what I was doing and told me, "That's not the way it works." I read the confusing legalese in the contract, and found that he was legally wrong. I was right. So - if you use MM, people, you can legally avoid the gouge, and get as fair a deal as the poor ever get.

I don't see any benefit in this law. Rather than defending those of lower financial standing (those who are most likely of using a payday loan company), the Federal Government has sloughed off the responsibility to ensure consumers aren't gouged.

Why would any member vote for such a bill?

I am fortunate to have a worthy enough credit rating that allows me to have an overdraft account set up @ 7.5 % interest for $ 5,000 with a local bank. As a single parent (1 child only) with no support payments; I use this overdraft often in between pays just to pay all my bills. This is in addition to my family who helps me out with clothes.

My point? 7.5 % is a competitive, reasonable interest rate these days. I believe there should be legislation to protect those that borrow against exorbitant, unfair interest rates from lending companies.

Perhaps an incentive would be--if the loan is paid back within 3-6 months the interest rate could be lower as an incentive to pay it back faster. (inbetween pay loans only, right?) This would help our many working poor and single parents...just scraping by.

Screening for the use of the monies could also be factored ie. rent, utility, groceries, $ 500 Christmas gift, extenuating circumstances(death) for money borrowed given a low interest rate; while debt re-consolidation, furniture, and trips/pleasure at a higher rate.

I support this bill. Just because there are people desperate enough or "stupid enough" out there to find themselves in a position to seek out these scams doesn't mean they deserve it. Loan sharking should have been outlawed years ago.

Shame on the Big Banks. It is because of the neglect and indifference of Canada's major banks that these scammasters are in business in the first place. The big banks routinely send the poor packing when cheque cashing services are requested. Most of the cheques tendered are issued by one level of government or another and the banks won't cash them or open simple acount for these forgotten Canadians. Forget about offering small loans to those that really need it. I guess the big banks are just too busy counting there billions in service charge profits to care about the poorest in our society.

with very few exceptions, most intelligent people avoid payday companies. The problem is the people using these are the worst off financially.

When they continue to use these outlets then run into hardship it puts a large strain on the welfare system. In essence the taxpayers keep these places in business.

So I agree that provinces should have the right to regulate this industry and shut down companies that continually charge criminally high rates!

I need the government to watch out for me, that their job. It's why I pay taxes. It's not about being free or not, it's about being safe.

Jean-Payniss Lalonde
Shefferville, PQ

It's just a question of freedom, isn't? Everybody's screaming about freedom, but when they get it and shoot themselves in the foot, they want limits to their freedom. So which is it?

A paternalistic government or a free one? And that's the rub: if everyone is absolutely free, then they're also free to be duped by someone who's using their freedom to dupe others. My two cents? Humans are too dumb to be allowed freedom.

Why regulate it, if you need money that bad that you're going to pay 1000% interest I think you should get hosed.

It only helps weed out the rich and the stupid.