Payday Loans

Low Fee Payday Loan

At present, Canadian legislation placed a cap on payday loans at $21 for every $100 borrowed. Placing an interest cap ensures that these short-term loans do not rip borrowers with sky-rocketing interest rates. If left unchecked, multiple interest layers can reach as high as 800% per year for a meager principal amount.

This does not mean that all payday loans are guaranteed foolproof. As such, more measures are being considered to ensure maximum protection for borrowers. The Financial Consumer Agency of Canada (FCAC) is the federal agency tasked to provide consumers with all information about the available financial products and services in the country, including payday loans. It also informs Canadians of their rights when dealing with financial institutions. With this, the availability of low fee payday loans are ensured.

One such rule that guarantees low fee payday loan is the law which states that any rate of interest that goes beyond 60% per annum is considered criminal. Erring loan facilities that charged exorbitant interest rates, “processing” fees, “deferral” fees and other multiple interest schemes have been duly punished by the Canadian Supreme Court. To ensure a more focused implementation of these financial laws, the regulatory authority over payday loans have been transferred to Canadian provinces since 2007.

Each province devised its own measures to ensure low fee payday loans. Manitoba even lowered the interest cap to $17 in every $100 for borrowings up to $500. Likewise, Alberta, British Columbia, New Brunswick, Nova Scotia, Ontario, Prince Edward Island, Quebec and Saskatchewan have taken their respective provincial measures to regulate the payday loan business.

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