If you are considering getting a quick loan to help cover some personal expenses, it’s important to make an informed borrowing decision. Let’s talk about two lending areas – payday loans and high-cost credit products, both regulated under BC’s consumer protection laws.
Understand the difference
Recognize that both payday loans and high-cost credit products involve high fees, but there are some key differences between them.
- Term length & amount borrowed: A short term loan of no more than $1,500 that must be repaid within 62 days. You cannot take out more than one payday loan at a time. Learn more about Payday loans on our website.
- Rates: Payday lenders can’t charge more than $15 for every $100 borrowed, including all charges and fees. A loan must not be more than 50% of your paycheque. The payday lender must have posters showing the rates that they charge.
- Cancellation: By law, you have two business days to cancel your payday loan. You must not be charged extra for cancelling. After this cancellation window, you may need to follow the lender’s cancellation policy. This information should be included in your loan agreement.
High-cost credit products
- Term length & amount borrowed: Term lengths can vary depending on the type of high-cost credit product. The law doesn’t speak to the amount of money you can borrow. The amount borrowed, along with other terms, should be in your high-cost credit agreement. Learn more the different types of high-cost credit products on our website
- Rates: Based on the legal definition of a high-cost credit product, you can be charged anywhere from 32% up to 60% interest on the amount borrowed.
- Cancellation: You have the right to change your mind and cancel the high-cost credit agreement before the end of the next business day. There should be no additional charges for cancelling the agreement. Learn more about other cancellation conditions and procedures on our website.
Do your research
- Before choosing to do business with a payday lender or a high-cost credit grantor, find out if the business is licensed with us. Find out by doing a search of our licensed businesses on our website.
- Do you know who you are doing business with? This can be harder than it seems, especially with online businesses. The laws in BC apply to online payday lenders and high-cost credit grantors too. Dig into the details to find out more about the company.
- Understand what allowable extra fees you may be paying. For example, charges and expiry dates may apply for cash cards on high-cost credit products.
There’s more to know before agreeing to a payday loan or high-cost credit agreement. Please do your research first and make sure you understand all the terms of the agreement.
If you want to know more about your rights (including cancellation rights) when it comes to payday loans or high-cost credit products, visit the Consumer Help section of our website.
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About Consumer Protection BC
We are responsible for regulating specific industries and certain consumer transactions in British Columbia. If your concern is captured under the laws we enforce, we will use the tools at our disposal to assist you. Depending on your concern, another organization may be the ones to speak to; other times, court or legal assistance may be the best option. Explore our website at www.consumerprotectionbc.ca.