Alberta now has the lowest payday lending rate in the country.
Predatory lending legislation came into effect at the beginning of the month, which drops the borrowing rate from $23 for every $100 borrowed to $15.
It also eliminates hidden fees and prohibits lenders from offering money while a loan is outstanding.
Human Service Minister Stephanie McLean says gone are the days of 600% interest rates.
“Rates that prevent Alberta from affording their basic needs. Rates that make it hard to pay the loan back, rates that require you to take out another loan to pay back the first loan. Rates that trap people into these vicious cycles of debt.”
She doesn’t think payday operations will have trouble adapting.
“There are similar models in other jurisdictions where we have seen the traditional payday lender do exactly that, and find a way to compete under this regulatory model.”
Payday lenders will no longer be able to charge a fee to cash a payday loan cheque, solicit directly by email or phone, or offer a loan when another is outstanding.
The legislation also requires government to encourage banks to offer alternative, short-term loans that are fair and accessible.
“Once we get these alternatives in place and uptake is strong, we will then bring down the annual interest rate even further,” said McLean.
More changes will take effect later this year.
More than 30 payday loan companies currently operate more than 220 branches in Alberta. (kdr, twd, chqr)