New B.C. regulations have lowered the limit on payday loan charges to $17 per every $100 borrowed.
Regulations that took effect Jan. 1 lower the maximum charge from $23, including all fees. The regulation covers short-term loans up to $1,500 for a term of 62 days or less.
The B.C. government began tightening regulations on payday lenders in 2009, when they limited charges to 23 per cent of the loan, and required lenders to post signs reminding customers they were paying an annualized interest rate of up to 600 per cent.
Public Safety Minister Mike Morris said the new 17 per cent rate is the second lowest in Canada.
The industry reported to B.C. regulators that 159,000 payday loans were taken out in 2015. Most borrowers hand over a cheque or a pre-authorized debit for the full amount of the loan, plus fees, to be paid from their next paycheque.
Scott Hannah, president of B.C.’s Credit Counselling Society, said the reduced fee is a step in the right direction at a time when consumer debt levels are at record levels.
Payday lenders are restricted to disclose all charges, and loans are limited to half of the borrower’s net pay during the period of the loan. Details of consumer protections in B.C. can be found here.