BC sets rate ceiling for payday loans

Just in: British Columbia has set the maximum allowable rate for
payday loans at $23 per $100, effective November 1, 2009. More details
to follow.

UPDATE: Official Government Press Release

Key regulatory changes include:

· The maximum charges for short-term loans will be capped at 23 per cent of the principal and that must include interest and all other fees. Some payday lenders currently charge as high as 30 per cent.

· A loan agreement between the payday lender and the borrower that sets out all charges, terms and conditions. Payday lenders must also display posters and signage showing their rates and fees.

· Borrowers will have the right to cancel the loan by the end of the following day, without paying any charges.

· Payday lenders will not be able to collect repayment on a loan directly from the borrower’s employer, or get unrestricted access to the customer’s bank account. They will also not be allowed to ask for repayment of the loan before the borrower’s payday.

· Payday lenders will not be able to issue more than one loan to a borrower at a time, and rolling one loan into another with new charges attached will also be prohibited.

· Payday lenders will not be able to issue a loan for more than 50 per cent of the borrower’s next paycheque.