Payday loans are unsecured short-term loan to meet unexpected, immediate cash needs. Payday loans are convenient and fairly economical, but not recommended for long term needs.
A payday loan should be used responsibly and for the purpose for which it is intended, namely to solve temporary cash-flow problems, or make ends meet between paydays. Payloan companies charge a fees for this services.
Payday loans are believed to have started in the early 90’s and now there are about 1400 payday loan stores throughout Canada. It was this steady growth in the industry and consumer statistics that presented the need for regulation. This was accomplished by the Government of Canada and the Provinces.
Maximum Charges Per Provincial Legislation
Not all provinces and territories are listed as legislation may not exist, for these areas however, the Criminal Code of Canada sets the maximum charge:
Canada – Section 347 of the Criminal Code makes it a criminal offence to charge more than 60% interest per annum
Alberta – Maximum charges permitted in Alberta for a payday loan:$23 per $100 lent.
British Columbia – Maximum charges permitted in British Columbia for a payday loan: 23% of the principal
Manitoba – Maximum charges permitted in Manitoba for a payday loan: 17% of the principal
New Brunswick – Interest is calculated at an APR of 59%. Example for a $100 loan for 14 days:
- Interest $2.26
- Broker Fee $17.74
Combined cost of borrowing is $20 per $100 borrowed.
Ontario – Maximum charges permitted in British Ontario for a payday loan: 21% of the principal
Saskatchewan – Maximum charges permitted in Saskatchewan for a payday loan: $23 per $100 lent.
The following are links to legislation governing Payday loans by their respective provinces and the Criminal Code of Canada:
Parliament of Canada
Prince Edward Island