Sask. will cap payday loan fees

08 Dec. 2009

The Saskatchewan government wants to limit the amount that can be charged for a payday loan — cash advances that some people borrow to make ends meet until payday.

Under regulations proposed by the province, payday lenders will be held to a maximum of 23 per cent of the principal, or $23 per $100 loaned.

Typically, the amount now charged varies from $20 to $30 per $100, although rates can sometimes be a lot higher, government officials say.

Justice Minister Don Morgan said he tried to balance consumer protection and loan companies' ability to make money.

The $23 rate is the same as is legislated in British Columbia and Alberta. In Saskatchewan, the average payday loan is $300 and is for 14 days. Another proposed change would mean that loans can't carry over from one month to the next, Morgan said. "A person would borrow, say, $100 one month. The next month they might have paid off half of that but they needed another $100 so the loan would in effect get rolled into being $150," Morgan said, describing the current situation.

"The loans would tend to grow as they would sort of consolidate and roll them over." Morgan is now inviting feedback from the public. The new rules would also need federal government approval.

Morgan said he expects the changes to be in force by the end of the year.

News Source:
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