Government to review the Payday loan Act 2008 after 5 years
Posted by BC-Loans
There have been several major changes made in payday lending activities in Ontario since 2008. The Ministry of consumer service has provided certain rights to the payday borrowers so that they can easily pay back this form of loan and don’t have to pay very high rates of interest.
Ontario has started an evaluation of enacted laws for payday lending companies within five years after the government enacted laws as a means to keep up with the changing industry. Payday loan act was started in 2008 that proposed several changes and restriction in maximum rate of borrowing.
The ministry of consumer service in Ontario said that this evaluation was designed to elucidate whether the 2008 loan act is still able to provide protection to the customers with the appearance of smart phone enabled online loan approvals, online transactions, and advanced forms of short term loans and high costs. The legislation was introduced 5 years ago that protected customers from high rates of interest imposed on short term payday advance leading to rising debts for borrowers that fail to repay their loans quickly.
Government to review the Payday loan Act 2008
Payday loan is offered for short term basis, mainly for two to 4 weeks time. The borrower usually agrees to repay the loan till the time he gets his next pay cheque. This type of borrowing allows customers to apply for payday loans quickly but little do they know that the high interest rates adds to the principal amount and makes it difficult for them to repay it quickly without having to cut down on their budget extremely.
After the introduction of payday loan act of 2008, the inquiries to the Government regarding payday loans have increased ten times. To this ministry replied, “As a part of its review, we will lay emphasis on the cost of borrowing. It will also see how the laws protect the customers while using the latest and most advanced technologies like getting a quick loan through smart phone application.
John Redins of Ottawa reported that he was once stuck in the dept trap of payday loans trying to repay his initial loan amount that kept on multiplying with every passing cycle.” He further added that people will continue to struggle because of their unpaid bills and other expenses but one would always like to get out of the vicious payday loan cycle.
He further added that, “he would want to see cap fees reduced further by the government and allowing people to repay the payday loan in installments so that they can come out of the cycle.” The Canadian payday loan association and its members welcome the review. But a spokesperson with the group said if the government is thinking of further reducing the fees that the payday loan companies are charging then it can drive the licensed lenders out of their business and send more and more customers offshore and online. According to the latest information, about seven hundred and fifty pay day lending storefronts are present in Ontario province only.