Borrower beware with payday loans
REGINA – It’s a quick way to get cash when you’re short before a payday. However, the Saskatchewan government wants people to think twice before borrowing money from a payday loan lender.
In Saskatchewan, lenders can charge up to $23.00 in interest and fees for every one-hundred dollars borrowed. On a four-hundred dollar loan, that adds up to $92.00.
The loan, plus interest and fees, is due on your next payday and is withdrawn automatically from your bank account. If a loan is defaulted, the lender can charge up to a maximum of 30 per cent per annum on the loan principle and up to $50.00 for a NSF cheque or if a pre-authorized debit is dishonoured.
“Sometimes people don’t have a lot of options when it comes to borrowing money,” says Cory Peters, the consumer credit division director for the Financial and Consumer Affairs Authority of Saskatchewan.
“We want to make sure that people are aware of the fees and re-payment timeframes that are associated with payday loans.”
A Global News analysis by Patrick Cain has found a striking correlation between payday lenders and low-income, high-social-assistance areas.Click here to view data »
The Saskatchewan government has six tips for those using payday loans:
- Use a licensed Saskatchewan lender;
- Know the costs – frequent use adds up over time;
- Loans are due on your next regular payday;
- Don’t take out a second payday loan to pay for the first one;
- Read the fine print;
- If you change your mind, you have until the end of the next business day to return the money and cancel the loan.