Payday loans have been used frequently by people around the country. Since they come with high rates of interest and fees, the government of Ontario has enacted Payday loans act, which restricts the maximum rate of interest charged on the payday loans. The act also provides certain rights to consumer taking payday loans.
Consumer protection concerns regarding the payday loans have recently been in the news. You can get both licensed and non-licensed payday lenders in the market. The licensed lenders offer products on short term credit to the consumers, which is similar to the payday loan service. Such kind of credits is not termed as payday loans by the lenders so that they can attract more consumers. Ministry of consumer service is examining currently if these product credits apply to the lending rules of Ontario. It is important for the customers to know various rights and if they feel violated at any time under the 2008, payday loan acts then they much get in touch with the ministry at 1-800-889-9768 and let them know about the violation they are facing.
Payday Loan Ontario
The payday loans act of 2008 offers variety of protections and rights to customers as a borrower under the payday loan agreement. The government enacted laws to protect its people from the traps of payday loans. The general legislation under the 2008 payday loan act recommend among rest of the matters, licensing regulations for all loan brokers and payday loan providers. Also consumer protection law includes improved disclosure requirements and the highest total limit of borrowing money for payday loans.
The ministry of consumer service is suggesting revising the regulations to elucidate what regulations are included in the maximum cost limit on borrowing money so that customers don’t have to pay over the maximum cost that is $21 for every hundred dollars borrowed under payday loan agreement. Also under this act, a customer cannot be charged with any fees that will increase the rate of borrowing a payday loan over the specified legal limit.
The proposing committee will also elucidate that the borrowers should get complete access to the complete amount of the payday advance when entering this agreement, without any deduction in the loan amount. The Ministry of Consumer Services is open for comments on the government’s intention to continue with regulatory amendments to tackle the issue.
As per the above mentioned law and regulation, it is important for any person who is thinking of taking a payday loan to carefully read the rights that he gets and should report to the authority in case a lender is cheating on him or charging him with any extra fees other than that mentioned in the payday loan act, 2008. If you looking to take a payday loan then you must know about these rights:
A lender cannot charge you over $21 for every $100 that you borrow. This is the maximum cost of borrowing and if he goes above the cost then it must be brought to the notice of the authorities.
Maximum cost of borrowing will include all the extra fees and charges when taking a payday loan. You don’t have to pay any extra fees above it and
A borrower is eligible to obtain the complete amount of your payday loan without any indirect deductions for fees or any other charges.
A borrower is entitled to use his payday loan straight away after finalizing a payday loan agreement. The lender may proffer to give loan to you through debit card or cheque. However, they are not allowed to charge any additional fees for this if the charges increase over the cost of borrowing to over $21 for every $100 then you must report.
A borrower get a time of 2 business days to cancel or change his mind regarding his payday agreement without any penalty.
A borrower cannot get a second payday loan from one lender until and unless he repays his first loan completely.
The lender is not allowed offer goods or other services to the borrower like insurance concerning the payday loan agreement.
The payday lenders in Ontario must have a license issued by Ministry of Consumer Services and fulfill with the requirements of Payday Loans Act, 2008.
These laws and regulations are made for people living Ontario so that they can choose payday loan schemes without having to pay huge amounts of fees. The maximum cost of borrowing of payday loans in Ontario is still higher than the other forms of borrowing available. One should explore other lending options available before borrowing a payday loan advance. These rules and regulations have been enacted as earlier different companies were charging different rates for the loans and the rate of maximum borrowing was so high that a borrower had to repay almost four times the money borrowed annually.
How does Ontario protect payday loan borrowers?
The legislation of Ontario has taken essential steps to offer extra protection to the customers of payday loan services. As per the payday loan act, established in 2008:
Loan brokers and payday lenders should be licensed by Ministry of Consumer Protection
It also bans some industry practices, like “rollover” loans
It provides a two-day “cooling off” period to the payday borrowers to cancel their payday loan for no reason without paying any penalty.
Also, maximum total cost of borrowing is $21 per $100 borrowed. It cannot exceed over this rate.
Are you thinking about taking a payday loan?
As a customer in Ontario, you enjoy certain rights. You must keep the checklist mentioned below to keep in mind when applying for a payday loan.
Complete disclosure on payday loan agreement
The loan brokers or borrowers have to give out certain details on the front page of your payday agreement. This information includes:
The time period of your loan agreement
The maximum total cost of borrowing that will apply on your loan
Advertisements for the payday loans that talk about the maximum cost of borrowing should also provide you definite added information, like what would be the maximum cost of a loan if you borrow $300 for a period of 14 days.
Limits on total cost of borrowing
Ontario legislation has put a maximum limit on total cost of borrowing that can be charged by the payday lenders and the customers entering a payday agreement. Payday lenders cannot charge over $21 for each $100 borrowed by a consumer.
The law prohibits certain practices under the payday loan act, 2008 like “Rollover” loan. “Rollover” loans ban the lender to give a new payday loan to the consumer until and unless he has paid his previous loan completely.
No lender can accept or ask the consumer an assignment of his wages.
“Cooling off” period
A consumer gets a 2 business days cooling off period to cancel his payday loan agreement without any reason as well as without incurring any penalty.
A loan broker or a payday lender can communicate with the borrower in a manner constituting harassment.
For instance, the payday lender or broker:
Can contact a customer for a maximum of 3 times a week (not including regular mail)
Cannot use intimidating or threatening language
Cannot use unreasonable pressure.
An immediate advance
Your lender shall give you loan money immediately after entering into a payday contract. If your payday agreement is entered over the phone or the internet, then the payday lender has 1 hour’s time to give your loan sanctioned money.
The broker or lender cannot deduct any money from the amount of payday loan as fees or other charges. For instance, if you took a loan for $300, then you are entitled to get $300. The lender cannot deduct the any amount as additional charges or fees.
The above mentioned rights will help you in getting complete money without any extra charges or fees from the lenders. Also when you know your rights, you can report a lender if he threatens you or tries to charge any extra money from you. The Payday Loan Ontario agreement act, 2008 enacted the above mentioned rights in Ontario . So next time you are thinking of taking a payday loan, you must read these rights before going to the lender so that he cannot trick you.