Ontario alone has over 50% of total Canada payday loans in Canada. According to the 2007 directives issued by the federal government, provincial or state governments have to take decision regarding regulation of payday loan businesses. Such steps are needed for effectively managing these businesses. If you are looking to take a short term loan a good understanding of these regulations becomes quite essential.
The Need for Regulations
Increasing dissatisfaction among borrowers for various lending companies is a prominent reason for issuing above mentioned guidelines. The government's decision is a reflection of its will to have a concrete and transparent system for the business. There are many shortcomings in present system that can be corrected only with the right approach and by making clear rules. With a commitment to make Canada payday loans much transparent and easier, the government came up with the Payday Loans Act, 2008. The act provides for better measures to protect all you consumers. Some of the key provisions of the act are mentioned below. To understand the rules clearly, these provisions shed some useful light.
Compulsory Licensing System
From now onwards brokers as well as lenders would require license to carry out their short term loan business. At the same time it is their responsibility to furnish all important information online. Moreover, their license should be clearly seen at their store.
No Requirement for Wages Assignment
New regulations ban the practice of requiring wages assignment. Now the lender is not allowed to ask you to furnish such documents for obtaining a Canada payday loan.
Ban on Rollover Practice
Rollover of debts means obtaining new loans despite not repaying the earlier ones. Under new regulations no lender can resort to this practice.
Discontinuance of Harassing Tactics
The practice of recovering funds through coercive measures such as using threat calls, threatening language and hiring goons cannot be used. Now your lender cannot put you under unbearable pressure.
Disbursement of Entire Amount
Usually, lenders do not credit the full loaned amount into your bank account. They tend to deduct administrative charges and processing fees right in the beginning. With new regulations in practice, lenders cannot to resort to such dishonest tactics.
Maximum Time Duration of One Hour
If you apply for a payday loan Canada over phone or through the internet, the lending company must not take more than one hour to make the credit available.
No Penalties on Cancellation of a Loan
Generally, companies charge you heavy penalties for cancelling a loan at the last moment. Now with new enactments in place, lenders cannot do so. They will have to give you a reasonable time period of at least two days to cancel or return the loan without any penalty. Lenders cannot ask for any explanation either.
Education Fund
This is a noble provision of the act wherein a lender will be responsible for making a contribution to the Ontario Payday Lending Education Fund. The proceeds of the fund would be utilized for educating consumers on different payday loan aspects. This step was inevitable because of growing ignorance of consumers about such loans. It will aware them of various available alternatives to seek financial relief.
Upper Limit on Borrowing
All agreements for obtaining short term cash will now have a maximum cost amount limit of $100. The minimum cap for the same has been pegged at $21. Now you cannot pay more than as cost for seeking a loan.
As a sincere consumer you must know all above mentioned new guidelines. In fact, the new act is very comprehensive and covers almost everything about this growing Canada payday loans business. A good understanding of these guidelines may get you the best possible deal.
