New rules for payday loans in effect
The “chef” is in the “Kreepy Kitchen,” part of the SESS Haunted Halloween event on Saturday night, hosted by the grad class.
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New regulations to protect consumers by prohibiting abusive lending practices and limiting fees and interest rates charged by payday lenders come into effect Nov. 1, 2009.
A payday loan is less than $1,500 borrowed for a maximum of 62 days, and is not secured. The borrower provides a post-dated cheque or pre- authorized debit form to repay the whole loan at the end of the term, usually the next payday.
B.C.’s Business Practices and Consumer Protection (Payday Loans) Amendment Act and the Payday Loans regulation prohibit lenders, including phone and Internet lenders, from:
* Practices that unreasonably increase the borrower’s debt load, including rollovers that require borrowers to pay significant extra fees for extending the time to pay a loan.
* Requesting an assignment of wages, or collecting from a borrower’s employer.
* Charging more than 23 per cent of the amount borrowed in interest and fees.
* Lending more than 50 per cent of a borrower’s take-home pay or requiring repayment before the borrower’s next payday.
* Operating unless licensed by Consumer Protection B.C.
As well, borrowers will have the right to cancel a payday loan by the end of the following day without charge by returning the money borrowed. Payday lenders must display rates and fees, and Internet and phone lenders must make rates and fees known to borrowers.
Compliance and enforcement will be administered by Consumer Protection B.C., a not-for- profit organization that operates at arm’s length from government. (It was previously named Business Practices and Consumer Protection Authority.) Information for borrowers and lenders is at
www.ConsumerProtectionBC.ca.
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