Looking back, Sal Costa wishes he’d been smarter about it, but he needed the money and it seemed like the only solution at the time.he’d only been finding low-paying work since moving back to Toronto from Saskatchewan some five years ago.
With basic living costs on the rise and more Canadians seeking credit, the federal government has launched a long-awaited consultation on what it calls “fighting predatory lending.” NDP MP Peter Julian introduced a bill to cut the criminal rate last year and independent Sen. Pierrette Ringuette has proposed similar legislation four separate times starting in 2013.
“We think that our long-term fighting is why this is happening in first place,” said Donna Borden, an ACORN leader from Toronto who became involved with the cause after her own experience with a high-interest loan in the early 2000s. “The predatory lenders have a very strong lobby, they have very strong voices,” she said. “Except for ACORN, which is a forceful voice, we’re outnumbered. I hope that this reality will be taken into consideration by the minister and the Department of Finance.”The lending industry’s biggest argument against change is that lowering the interest rate will paradoxically hurt borrowers and leave them with much worse options.
The 60 per cent ceiling on the “effective annual rate of interest” under the Criminal Code is based on a complicated formula tied to actuarial principles that takes into account the frequency of payments. A CLA analysis based in part on “the pricing practices of its members” concluded that for every percentage point drop in the legal annual percentage rate, almost four per cent of non-prime consumers would lose access to credit. The CLA says lenders would reject those people if they couldn’t charge enough interest to cover the credit losses expected on loans that are not repaid.
During an August conference call with Bay Street analysts, he said his company is in regular contact with the government. “They put out a consultation, which we feel, given our meetings with them, we’ve kind of helped shape and helped inform based on the discussions that we’ve had.” “It’s a good line because it is putting forward a question that cannot be answered in the definitive,” Ringuette said. “But I will say that with the quantity of on-site and online predatory lenders, that access will not be reduced to the point of Canadians in dire need not being able to access .
Goeasy has also been steadily lowering the average interest rates it charges consumers — in 2017, the weighted average interest rate of the company’s loan portfolio was 46 per cent and as of August, Mullins said it was at 31 per cent. Changing the rate could also affect the late fees telecoms and utilities charge customers and impact creditors of high-risk businesses like startups or companies facing insolvency.
But after being turned down by CIBC and Scotiabank, Allan, who works as a materials handler in Toronto, instead took a $10,000 loan from easyfinancial. “Many banks offer small, short-term loan and credit options, all of which can be accessed at far lower cost than payday lenders’ products,” he said. He also pointed to information on how customers can apply for overdraft protection to avoid insufficient funds charges.
When will your ppl realize; capital(ism) stinks.
Interest rates should be capped at 20%. Anyone lender that exceeds this should be shut down
What about people to take out loans as leverage for investments? They know the risks.
Shame that number.!!!!