Canada implements a new 35% interest rate cap on high-interest loans to combat predatory lending practices. While payday lending remains exempt, fees are now capped. The change is met with mixed reactions, with some praising its protection of vulnerable borrowers while others express concerns about its impact on alternative lenders.
There’s a new limit on the interest rates Canadians are charged when they take out high-interest loans — a move aimed at preventing what the federal government calls ‘predatory lending practices.’The first-ever change to the criminal rate of interest — now sitting at 35 per cent — is being met with mixed reactions. Effective Jan. 1, lenders are prohibited from charging Canadians an interest rate of more than 35 per cent on loans. Before the legislation changed, lenders could charge up to 47.
9 per cent. While payday lending is exempt from this change, there's now a federal cap on how much payday lenders can charge in fees — $14 per $100 borrowed. That rate used to be regulated by provincial governments. 'Predatory lenders can take advantage of the most vulnerable people in our communities, including low-income Canadians, newcomers and seniors — often by extending very high interest rate loans,' said a statement from a spokesperson from the federal finance department. Anti-poverty advocates call payday lenders 'criminal,' urge feds to cap interest rates The changes are being celebrated by advocates and organizations that work with lower-income Canadians who have struggled to repay loans with high interest rates. But associations representing alternative lenders argue it's forcing them to turn away many customers who don't qualify for loans with interest under 35 per cent, which could make them turn to illegal lenders.In Calgary, the community impact director at Momentum — an organization that helps low-income Calgarians find jobs and manage their money — says a decade of advocacy has paid of
INTEREST RATES LOANS PREDATORY LENDING PAYDAY LENDING CONSUMER PROTECTION
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