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Thread: Alberta government protects payday loan consumers

  1. #1

    Default Alberta government protects payday loan consumers

    Alberta government protects payday loan consumers

    from Alberta.ca News by [email protected]
    Payday loan companies will have to follow new rules limiting borrowing costs, banning rollover loans and giving borrowers a cooling-off period under a consumer protection regulation introduced by the Alberta government. “Many Albertans use payday lenders for short-term small cash loans, but some get caught up in a vicious cycle of debt at high borrowing costs,” said Service Alberta Minister Heather Klimchuk. “We are setting clear rules that protect consumers and ensure people know what they will be paying for when they borrow from a payday lender.”
    The new regulation sets the maximum total cost of borrowing at $23 per $100 borrowed, including interest and any fees charged as a condition of the loan. The amount requires federal approval before it comes into effect.
    Other consumer protection provisions of the regulation come into effect September 1 and include:

    • prohibiting “rollover” loans which allow consumers to pay off previous payday loans at an extra cost;
    • a two-day cooling off period during which time consumers can return the money and cancel the loan without incurring any costs;
    • prohibiting “discounting,” the practice of putting some fees into the amount of the loan, as it makes it harder to determine the true cost and can result in consumers walking away with less than they intended to borrow;
    • prohibiting lenders from requiring, requesting or accepting information that gives them access to the borrower’s bank account, except for pre-authorized repayments;
    • disclosure provisions requiring lenders to prominently post information in their stores explaining the cost of borrowing;
    • a requirement that payday lenders use plain-language contracts; and
    • a requirement that payday lenders be licensed by the provincial government.

    http://www.gov.ab.ca/acn/200906/2613...515D86A9D.html




    I'm glad the Alberta Government is doing something about this. It's unfortunate that some people end up in these traps, but when your down and out, and have no place to turn for money, its quite easy to fall into a trap like this. Its too bad these greedy corporations take so much from people that have so little as it is already. Getting a loan for $100, and paying back $130+ and then odd fees on top of this... You end up paying almost about double back...Absolutely Brutal. About time the Government step in.

  2. #2

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    Great news! I hope this starts of trend back to "real" banks, or at least, less expansion by these sharks.

  3. #3
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    I'm certainly not an expert on these things and how they operate, but I'm glad that the government is taking steps to ensure they're dealing relatively fairly with those who use them. Hopefully the new regulations have some teeth and provide people adequate protection.

    It's just so unfortunate that the people who most frequently use such places are the ones least able to afford their incredibly high fees and charges.

  4. #4

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    The people that frequent these places CANT go anywhere else, they'd get denied a regular loan or credit card, because of low income, and likely poor credit as well...

    Being poor and down and out is tough... and these loan sharks don't make it any easier, but offer that "short term" relief that really turns in to a long term problem for most that fall in to these traps...

  5. #5

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    ^Some people who use these stores might be like that, but not necessarily everyone. I think a large part of the reason they are proliferating rapidly, is that they are crossing over into mainstream middle class. People drive by, and think "hey, quick cash - I can get that new toy sooner, and the bank doesn't even have to know about it".

  6. #6

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    well, those middle class people are really shooting themselves in the foot. That new toy could be bought on a visa, the visa could build them credit, and as long as they pay by the time the due date, they wont incur any interest charges. Nothing like 30% interest plus processing fees.

  7. #7

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    ^Anyone who uses these stores is shooting themselves in the foot. People don't always think rationally though, especially in a "tight" situation. At least if these changes go through, people will see the interest cost clearly.

  8. #8

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    Despite the new laws these places are still a debt trap. They start a cycle of dependance.

    charging 40 bucks in fees to borrow 200 bucks for a week is UNREAL!

  9. #9

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    pssst... I'll loan you a thousand if you give me back 1200 in a week. If you don't, I'll bust your knee caps.


  10. #10

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    Part of the reason the fees are so high (and part of the reason that people are going here instead of "normal" banks) is because the customers have a poor credit rating and the default rate is high.

    This is a symptom of a deeper problem. Treating the symptom is a waste of time.

    If you think they are so predatory, open up your own shop and start chargin 10% per week instead of the 30-40% per week effectively being charged now. Nobody's stopping you.

  11. #11
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    The main symptom is that people are stupid with their money. I'm betting many of the payday loan customers are roughnecks who blow their rig-pig salaries on projection TVs, a monster-wheel Dodge Ram and a garage-full of ATVs instead of saving and investing their income. Kids need to learn from a young age about financial management.
    “You have to dream big. If we want to be a little city, we dream small. If we want to be a big city, we dream big, and this is a big idea.” - Mayor Stephen Mandel, 02/22/2012

  12. #12
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    I'm glad to see some disclosure on the value of the payday loans. I'd like to see (if possible) if a credit union in poorer sections of town to make it a level playing field for everyone.
    "Talk minus action equals zero." - Joe Keithley, D. O. A.

  13. #13

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    I am sorry there are many well heeled people who can't manage Credit, so it's not just a aymptom of the poor. The only diffrence is the well heeled have assests that can be seized.

  14. #14
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    Payday loan changes take effect in Alberta:

    http://www.edmontonjournal.com/busin...041/story.html
    "Talk minus action equals zero." - Joe Keithley, D. O. A.

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