UPDATE: On September 1, 2018, the maximum cost of borrowing changed to $15 for every $100 borrowed.
On January 1, 2017, the cost to get a payday loan changed. The BC government made changes to the law which now state that for every $100 you borrow, the maximum in fees that you can be charged is $17.
So let’s talk about that some more…
First of all, what is a payday loan?
A payday loan is a small short term loan. Borrowers may not receive more than $1,500 and it must be repaid within 62 days of receiving it.
How are payday lenders regulated in BC?
Payday lenders have been regulated in BC since 2009 and Consumer Protection BC licenses and regulates the sector. BC’s payday lending law protects borrowers by defining what a payday loan is, by setting a maximum allowable cost of borrowing, by providing cancellations rights to borrowers, by setting out disclosure requirements, by requiring licensing and by outlining prohibited practices and maximum penalties for violations.
What are some key things to know about your payday lending rights?
- The most you can be charged is 17% of the amount you borrowed, including all charges and fees – no matter what.
- You should not be charged for cash cards.
- Insurance is optional. It’s okay to tell the business that you don’t want insurance.
- If you are getting your 3rd loan in 2 months, you can pay it back over 3 bi-weekly pay periods.
What if you got a payday loan before January 1, 2017?
The changes are not retroactive. This means that if you took out a payday loan before January 1, 2017, you are still subject to the old rates ($23 for every $100 borrowed).
There’s a lot to know about your rights and responsibilities around payday lending. You are welcome to read the payday loans regulation in full or find out who is licensed by visiting our website at www.consumerprotectionbc.ca. If you have any questions about payday lending in BC, please contact us or leave us a comment here.
What would you do? A guide to being a savvy consumer: payday loans
The BC government’s news release: New, lower maximum charges for payday loans now in effect