Category Archives: Payday Loans

Payday Loans May Outstrip Credit Cards

Posted by on February 7, 2012 No comments

Payday lenders could overtake credit cards and become a mainstream method of borrowing, a report by one of the UK’s leading accountancy firms has warned.

PricewaterhouseCoopers (PwC) said that consumers unable to borrow from traditional lenders, including credit card companies, were seeking alternatives such as so-called payday loans.

But while these short-term, high-cost loans have previously been associated with higher risk borrowers on low incomes, the convenience and innovation offered by payday lenders are attracting a broader and more prosperous selection of consumers, at the expense of traditional bank loans.

In its report, Precious Plastic 2012, Simon Westcott, director at PwC, said: “Mainstream lenders need to be aware that what may have begun as a last resort could be an enduring relationship, as consumers are pleasantly surprised at the convenient and innovative service they receive from these smaller, more agile providers.

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Things to Know About Payday Loans

Posted by on January 14, 2012 No comments

It is common for most people to find themselves in situations which require immediate financial care. Most of such people however find themselves unable to bear the unexpected needs and therefore require some kind of financial boosting which is where the payday loans come in. The loans can be defined as cash advance loans on the short term. They are meant to save unexpected situations which need instant money to be repaid on the next pay check day.

The loans can also be defined as instant cash loans taking into consideration that most lenders do process them within a matter of minutes or hours after application. Although they do not involve lending huge amounts of money and they indeed save many people from their financial woes till they get their next salary. The money borrowed is then repaid as agreed with the lender from the next paycheck. The lending attracts interest rates and other charges but the good news is that most companies have made the charges and rates affordable.

It is not that hard to secure the convenient loans seeing that it is even possible to apply for your loan online. Some people can even fill the required application forms using their phones making the process very easy and fast. Some of the things that one is required to fill out in the forms are bank details and name and address as well as some proof that one is actually employed. As long as one meets these requirements and the loan can be transferred to the given account number within a matter of minutes. It is important to note that some of the companies directly deduct the amount once the next salary comes in while others could ask for post dated check to be deposited before giving out the loan.

After deciding that a payday loan is the alternative for a certain situation, one should always make a point of gathering all the essential details about the lender. It should not be forgotten that this is a serious affair that needs to be handled with caution since very private information is given out. Borrowers should be aware that not all lenders are genuine as some are out to swindle them hence great care should be taken before going ahead with the transactions. A simple online research can help make an informed decision about the lender you are about to work with.

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New Rules and Regulations Simplifying Canada Payday Loans

Posted by on January 14, 2012 No comments

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.

Canada payday loans. With the passing of new act, Canada payday loans have become more clear and concrete. The government has made a sincere effort to simplify the entire loan obtaining process. Now consumers can easily access all important information online on the ministry’s website.

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Payday Loan Rules Take Effect In Saskatchewan

Posted by on January 14, 2012 No comments

The Saskatchewan government is touting its new rules for the payday loans industry, saying they will make the loans more transparent and potentially reduce costs for consumers.

The Payday Loans Act took effect on Jan. 1, said Roger Sobotkiewicz, director of the payday-loans division of the Saskatchewan Financial Services Commission. It is the first time the province has had legislation specific to the payday-loan industry.

“It’s part of a cross-Canada trend,” Sobotkiewicz said Tuesday. “Several other provinces have just put in similar legislation or are putting in similar legislation. I think the industry jumped onto the radar screen across Canada at the same time and all the provinces have sort of worked together to move legislation ahead.”

Alberta, B.C., Manitoba, Nova Scotia, and Ontario have rules in place governing the industry.

Payday loans are short-term advances that generally have to be paid back before the customer’s next paycheque and are usually accompanied by high interest rates and service fees. Some regulations previously applied to them under the Trust and Loans Corporation Act, but the new legislation is more direct and comprehensive.

One of the first changes borrowers are likely to notice is that lenders are now required to display “very large signs,” visible upon entering the premises, which list all of the fees for payday loans. That is to “allow borrowers to shop around,” Sobotkiewicz said.

Also noteworthy is a new cap on loan fees. They must not amount to more than 23 per cent of the principal borrowed; that is, $23 on every $100, Sobotkiewicz said. Under the old system, depending on which fees were taken into account, some lenders “definitely would have been over” the 23 per cent cap that is now in place, he said.

The new laws also set out that lenders and borrowers must enter into a written agreement, which must include certain items. For example, written disclosure, prominently indicating the loan is a high-cost one, must be provided prior to agreements being finalized, Sobotkiewicz said.

The lenders also have to provide notice of the right for a borrower to cancel the loan within one business day of entering into it, only repaying the principal amount in the process. Also significant among the new rules are restrictions on how many times lenders can try to make a pre-authorized debit, and prohibitions on rollover loans and concurrent loans.

Operating a payday-loans business might become more costly. Under new licensing rules, lenders must pay an annual fee of $2,000 for each location they operate; previously, a licensing fee did not need to be paid for each individual business site, such as in the case of a chain of lenders.

The government’s intention to make the changes was announced last summer. Since then, it had been waiting for a federal government exemption from a Criminal Code provision about interest rates, which was necessary for the province to regulate the industry and set caps.

What is perhaps most important for borrowers to know is that they should do their research on the numerous changes and become informed of their rights prior to obtaining a loan, Sobotkiewicz said, noting there are enforcement actions the government can take if the laws aren’t followed.

“What we encourage is for borrowers to go to our website, sfsc.gov.sk.ca, because we have information about things borrowers should consider before entering into payday loans,” he said. “If they feel their rights weren’t respected, by all means contact us. We would like to know about it.”

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