The first time Desiree Wells took out a payday loan, in 2001, she needed quick cash to cover an unexpected vet bill for her cat.
“That loan is still haunting me,” Wells, 36, said Monday. “It’s just basically a trap. It’s literally a nightmare and it’s a vicious cycle.”
On Tuesday at noon, Wells will attend a rally outside a Money Mart location at Commercial Drive and East 10th Avenue, along with members of B.C. ACORN, a group representing low- and moderate-income families across Canada. A statement from ACORN said the rally aims to pressure the B.C. government to “clamp down on predatory lending in B.C.”
Wells, who has an artificial leg that limits her ability to work, is on disability assistance and earns “a bit of extra money” designing and selling jewelry. She has friends who have used payday loans, she said, and none have had positive experiences.
ACORN wants the B.C. government to change the legislation regulating the payday loan industry, including reducing the maximum rates charged, currently up to $23 per $100 borrowed.
Those rates can work out to the equivalent of paying 500 per cent or more annually, according to a January report from Vancity. British Columbians, the report noted, are using payday loans at an increasingly higher per-capita rate than the rest of the country.
B.C. NDP finance critic Carole James raised the topic last month in the legislature, calling the findings of the Vancity report “shocking,” and adding: “The annualized percentage rates are outrageous and cause families to get further and further and further into debt.”
James pressed the Liberal government on why they had not followed through on “an election platform promise … in 2013 to reduce the maximum interest payable on payday loans.”
In an emailed statement Monday, a spokeswoman for the solicitor-general’s ministry said staff are working on a proposal for a review of B.C.’s payday lending regulations, which is expected to be provided to the minister by the end of the year.
The industry has come under fire recently, including in the U.S., where this month the Consumer Financial Protection Bureau released a proposal to regulate payday loans.
Last month, the Alberta government introduced “An Act to End Predatory Lending,” a bill proposing to “bring substantive changes to the payday lending industry, including the country’s lowest borrowing rates,” the government said.
But Alberta’s changes could have unintended consequences, said Tony Irwin, president of the Canadian Payday Loan Association.
“In Alberta, what they’ve done will be devastating for the industry, but more importantly than that, it will result in a denial of access to certain borrowers who need payday loans,” Irwin said Monday.
“These changes are going to force consumers to the illegal, unlicensed industry,” said Irwin, adding many illegal loan companies operate online and are based “offshore, outside of any Canadian jurisdictions.”
“When the regulations are too restrictive, forcing some of the licensed lenders to close their doors, the need for credit doesn’t go away. So those borrowers are going to go somewhere to find it,” Irwin said.
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— with a file from Rob Shaw
Five things to know about payday loans in B.C.
The problem:
Payday-loan companies offer short-term, small sum loans for high fees, to people who need quick cash. In B.C., payday lenders can charge up to $23 per $100 borrowed.
Those rates can work out to the equivalent of paying 500 per cent or more annually, according to a January report from Vancity. British Columbians, the report noted, are using payday loans at an increasingly higher per-capita rate than the rest of the country.
Between 2012 and 2014, the report said, the number of payday loan borrowers in B.C. grew 58 per cent, the report said, and the size of the industry grew from about $318 million to more than $385 million.
The problem:
The industry has come under sharp criticism recently. In the U.S., federal regulators are trying to crack down on payday lenders.
A proposal to regulate American payroll lenders was unveiled this month by the Consumer Financial Protection Bureau, whose director Richard Cordray told the New York Times that the payday lending industry “is much like getting into a taxi just to ride across town and finding yourself stuck in a ruinously expensive cross-country journey.”
B.C. NDP finance critic Carole James raised the topic last month in the legislature, calling the Vancity report’s findings “shocking,” adding: “The annualized percentage rates are outrageous and cause families to get further and further and further into debt.”
James pressed the Liberal government on why they had not followed through on “an election platform promise by the government in 2013 to reduce the maximum interest payable on payday loans.”
In an emailed statement, a spokeswoman for the solicitor-general’s ministry said Monday “staff are working on a proposal for a review of the province’s payday lending regulations, which is expected to be provided to the minister by the end of 2016.”
The solution:
A statement released Tuesday by ACORN said their members “want the government to make changes to its seven-year-old legislation to include regulations that will tackle online lending, extend payback periods with no penalty, and develop a database that would prevent repeat users from falling into vicious cycles of debt.”
The industry has come under fire recently, including in the U.S., where this month the Consumer Financial Protection Bureau released a proposal to regulate payday loans.
Last month, the Alberta government introduced “An Act to End Predatory Lending,” a bill proposing to change maximum borrowing rates to the lowest in Canada.
The industry’s take:
The head of Canada’s payday-lending industry association says Alberta’s changes could have unintended consequences.
Tony Irwin, president of the Canadian Payday Loan Association, said Alberta’s changes “will be devastating for the industry, but more importantly than that, it will result in a denial of access to certain borrowers who need payday loans.
“These changes are going to force consumers to the illegal, unlicensed industry,” said Irwin.
What You Need to Know About Auto Loans to Save Thousands
Getting auto loans or car loans are critical for meeting the transportation needs of people. To get from work to home and from point A to point B, you need a car, if public transportation is not feasible.
Unfortunately, most auto buyers treat car financing as an afterthought during the car buying process.
The following tips are on auto loans, on what to do and what to stay away from.
Be Aware of Your Incentives
There are numerous auto web sites that provide up-to-date information relating to automobiles. You can research available low-interest or even zero-percent auto financing deals you might qualify for.
Even bad credit auto loan financing is possible with different rates. For example, good credit may qualify for zero-percent car financing as an incentive for some auto buyers.
Be Prepared Before Buying
Auto financing should be well prepared ahead of time by going to a bank or credit union. Car financing in advance of a car purchase can give you choice at the financing table of the car dealer. GM, Ford, Toyota, and other car companies offer “captive financing terms” through their credit financing arms. However, if you have been pre-approved for lower interest rate loans you can negotiate with the car dealer from a position of strength.
Car dealers will bump up the finance interest if they don’t make that much money on the car sale. Remember, the car dealership gets a portion of that interest of any loan financed through them. Herein, if you don’t inform the car dealer that you have prior auto financing in place during car price negotiations, when the time comes to discuss the financing, you have the leverage. Then if they try to play games during with their finance offer, you can refuse their offer and implement you own pre-approved car financing.
In this manner, competition between lenders with the best financing options will prevail. Hence, pre-financing gives you negotiation leverage and control.
Stay Within Your Means
Before you start your car buying journey, know how much car you can afford. You can use financial calculators to determine how much car your personal finance will permit you to own.
By knowing the affordability range, you know how much of a down payment to make and how much your monthly payments will be.
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