by Morinville News Staff
Payday lenders are now required to provide all loans with installment plans, with no penalty for early payback. The government says the new rules greatly reduce the interest rate, as well as take measure to keep Albertans from falling into a cycle of borrowing.
Under the new regulations, lenders cannot repeatedly attempt to withdraw pre-authorized debit amounts when there are insufficient funds. They are also prohibited from charging large fees to borrowers when pre-authorized debits repeatedly fail.
“Albertans told us they want lower interest rates, longer payback periods and better alternatives,” Stephanie McLean, Minister of Service Alberta, said in a release Wednesday. “We listened and took action. I’m proud to be part of a government that supports families by improving consumer protections.”
The Act, originally introduced last spring, also requires the government to encourage financial institutions and community groups to offer alternative short-term loans that are fair and accessible.
Joanne Currie, Director, Financial Stability & Independence, United Way Capital Region, is pleased with the new rules.
“We appreciate the government’s leadership in encouraging fair lending practices so that use of short-term credit does not jeopardize one’s long-term financial stability.”
Wednesday’s additions are the next step in the Act. In August, the rate on loans was reduced from $23 for every $100 borrowed to $15 per $100 borrowed. All fees must be included in the cost of borrowing rate.
There are more than 220 payday loan branches operated by 20 companies in the province.