Alberta Passes Law to Reduce Payday Loan Fees

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For individuals turning to payday loans, the province has announced a reduced borrowing rate that will help lower the interest rate and fees starting August 1.

The cost of borrowing has been reduced from $ 23 per $ 100 borrowed to $ 15 per $ 100 with all related charges included in this cost, eliminating hidden fees and charges.

This is the first phase of the Alberta governments Take action to end predatory lending legislation, other changes taking effect before the end of the year.

“Last fall, Albertans told us they wanted lower interest rates and stronger protections for consumers,” said Stephanie McLean, Minister, Service Alberta. “Today, it is the law. We put an end to predatory 600% interest rates and vicious debt circles with a level playing field that protects Albertans.

Payday lenders will no longer be able to charge a fee for cashing a payday loan check, soliciting directly by email or phone, or offering a loan when another is unpaid.

The Act also requires the government to encourage financial institutions to offer short-term alternative loans that are reasonable and accessible to all Albertans.

The first micro-loan that has come forward is from First Calgary Financial and Chinook Financial, which offer an annual interest rate of 19 percent with a repayment period of six to 18 months.

The cost of borrowing $ 100 over two weeks at an annual interest rate of 19% is 73 cents, compared to payday loans of $ 15 per $ 100.

“I am very pleased that First Calgary Financial is launching its Cash Crunch Loan on August 22. It’s credit with reasonable rates, longer repayment terms and financial literacy supports that prepare Albertans for financial health, not bankruptcy, ”said McLean.

By reducing the cost of borrowing, the government hopes it will save people hundreds of dollars in debt repayments that are already struggling with low income levels.

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