PayDay Loans - Reality cheque - payday loan companies - Canada

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New PD Lending Laws July/09 - Ontario

Postby Ottawa_Chap » Mon Jun 15, 2009 01:53:19 PM

Never used a PD loan company, but found this while searching the Consumer Protection website. Great info there..! About time tougher enforcement is hitting these short-term loan lenders; sick of watching these companies bleed the lower-income folk dry.

From my eyes, the "2 day Cooling Off" period may sting these businesses, as clients can opt out of (pay back) the loan within 2 days without penalty. On the other hand, it could be beneficial for these lenders, too.. It may attract a whole new crowd of customers who first figured they'd 'exploit' the hole and use the service for a day or two; only to learn that this may be a useful service down the road, and thus, again patron the lending establishment another time.

Payday LendingPayday loans have become increasingly popular since coming to Canada in the early 1990s. Though they offer quick cash when you need it, you may end up paying back more than you anticipated.

New regulations are offering stronger protections designed to provide you with the information you need to make informed decisions about short-term borrowing. These rules will help you develop a better understanding of the costs involved before entering into a credit agreement.

What is a Payday Loan?
A payday loan is a small value, unsecured loan made to a borrower who guarantees repayment with a post-dated cheque or pre-authorized debit. Lenders typically require borrowers to prove three months of continuous employment, produce a recent utility bill in their name to establish address, and have an active chequing account. No credit check is performed.

In Canada, loans typically reach a maximum advance of 50 per cent of the borrower’s net pay. The average loan in Canada is approximately $300 with a term of 10 days to two weeks.

There are approximately 1,350 stores operating in Canada, with 700 in Ontario

How does Ontario protect consumers of payday loans?
Ontario has taken steps to provide additional protection for users of payday loan services.

Starting on April 1, 2009, users of payday loans benefit from stronger consumer protections in the Payday Loans Act, 2008. The legislation:

Requires payday lenders and loan brokers to be licensed starting April 1, 2009.

Prohibits certain industry practices, including “rollover” loans, effective July 1, 2009.

Gives payday loan borrowers a two-day “cooling off” period to cancel a loan with no reason without incurring a penalty, effective July 1, 2009.

Establishes an Ontario Payday Lending Education Fund, paid for by licencees.
The legislation will also set a maximum total cost of borrowing cap for payday loan agreements in Ontario of $21 per $100 borrowed, as recommended by Ontario’s Maximum Total Cost of Borrowing Advisory Board.

Learn more
News release: Ontario Protects Payday Loan Users - March 11, 2009

Payday Loans Act, 2008 and regulations.

Payday lenders and loan brokers’ licences

Read more about consumer's Payday Loans Bill of Rights.

The Maximum Total Cost of Borrowing Advisory Board’s report on an upper limit to the total cost of borrowing for payday loan agreements in Ontario.

The Cost of Providing Payday Loans in Ontario (PDF), report prepared by Ernst and Young
Infuriating one C/A at a time..
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Money Mart - $100M Tab!!

Postby Ottawa_Chap » Sun Jun 14, 2009 05:20:15 PM

$100M proposed settlement on table in Ontario's Money Mart lawsuit

Last Updated: Wednesday, June 10, 2009 | 8:50 AM ET

The Canadian Press

A $100-million settlement has been proposed in a class-action lawsuit launched by Money Mart customers in Ontario.

The lawsuit was launched in 2003 on behalf of 264,000 borrowers who alleged Money Mart charged "criminal" interest rates on 4.5 million payday loans over 10 years.

On average, the lawsuit claimed each borrower paid about $850 in costs associated with the payday loan.

In a statement, Money Mart's lawyers say the company will pay $27.5 million in cash, forgive a minimum of $43 million in debts incurred on or before April 30, 2009, and $30 million in what's described as transferable transaction credits.

The deal has been agreed to by both sides and hinges on approval from the courts.

The federal government made legal amendments in 2007 allowing provinces and territories to regulate the payday loan industry and place limits on the cost of borrowing.

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RE: Money Mart - Is everything OK?

Postby darrylrio » Thu Apr 16, 2009 01:45:08 AM

Lenders have this tendency of charging interest at very high rate, when you approach them to get a loan for few weeks. So, when we talk of Cheap Payday Loans, it does not sound convincing enough. However, there are some tips that can help you in finding a suitable deal that is less burdensome.Payday loans are known for high financial charges. These charges are so high that when converted into interest rate, the APR goes many hundred times higher than on any other loan. The APR may go up to 500 percent. This is because these loans are approved for two weeks only, and the lenders have no security, other than a post-dated cheque from the borrower.
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RE: Money Mart - Is everything OK?

Postby montyloree » Fri Oct 12, 2007 06:27:14 AM

We're starting to get more people searching for Money Mart here: I was looking at the traffic logs today.

I'm wondering if there is something going on with Money Mart in Canada.

Are people just getting smarter by searching for information online before they buy?

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RE: Reality cheque - payday loan companies

Postby angella » Sat Sep 01, 2007 10:41:43 PM

Actually, there are some smaller payday loans companies owned by people as well. I used to do subcontract work... and one of the places I was sent was a payday loans company owned by a private individual and he had a friend running it. It was soooooooo poorly run. The poor fella running it had previously only fixed and sold cars for the owner, and was way out of his element.

Even as poorly run as it was, and with as many charge offs as this fella had, it was phenomenally lucrative!
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RE: Reality cheque - payday loan companies

Postby ResponsibleWithMoney » Mon Aug 13, 2007 03:22:19 PM

Most Canadian banks fund these companies, similar to the models in the U.S. I didn't realize that you can be a private investor with these types of companies - if so, robtr31, was this a small payday loan business, rather than a large chain?

I am by no means an advocate of payday loans, I feel that this industry robs the poor. But, I might be open to investing with them regardless :P

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RE: Reality cheque - payday loan companies

Postby montyloree » Sun Aug 05, 2007 06:57:51 AM

Hey robtr31,

That's an interesting story that you make 50% investing in a payday loan company..

There is a time and place for payday loan companies in Canada... there obviously is a market for or these companies wouldn't exist.

It's not my first choice of company to deal with.

I'll put it this way... if you're frequenting a payday loan company, you're probably not on your way to riches anytime soon!

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RE: Reality cheque - payday loan companies

Postby robtr31 » Sat Aug 04, 2007 09:35:44 PM

i invested in 1 of these payday loan companise once ,invest 5000.00 at 50% interest ,every 2 years you roll it over,and receive a check for 208.00every month.did that for 4 term contracts ,8 years ,then they bought out my contract ,returned my origanel 5000.00.

if these companise are paying out 50% there making a lot more then 60% i would think.

so i helped the bad guys in a way i guess ?, was a good return on money for me ,if people use pay day loans propely and don't over extend them self they could be use full some times.

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Reality cheque - payday loan companies

Postby montyloree » Fri Dec 01, 2006 12:00:00 AM

Reality cheque

Super-profitable banks not sticking to rules


If you have a complaint, first take it the bank branch manager, then
to the bank ombudsman, and if all else fails, go to Canada 's banking ombudsman, Michael Lauber.

For information, go to or call

It's a no-brainer that Canada 's Big Five banks are rolling in the
dough. For fiscal 2003, they raked in an unbelievable $10.5 billion in
profit -- a brand new record high.

But how are our banks treating their customers?
Are they abiding by the laws of the land?

Many Canadians may be unaware that on Sept. 30 Ottawa tightened
Canada's Back Act to make it illegal for banks to refuse to cash
federal government cheques -- whether you're a customer of the bank or not. These cheques are to be cashed free of charge.

As well, it is now against the law for a bank to refuse to open a
basic bank account -- which is a now a right for all Canadians with
proper identification. All you need to do is present two pieces of
identification, which can include a passport, a driver's licence, a
health card, a birth certificate or a social insurance number.

So what a shock it was to me to find out my son's friend -- K.C. --
was forced to cash his cheques at Money Mart, when he was refused a bank account.

"Why" I asked the 19-year-old, "would you pay more to cash a cheque
when you can do it at a bank?"

His reply: "Banks denied me because I don't have photo ID."

K.C., by the way, is earning some badly-needed cash by getting up in
the wee hours of the morning to distribute Sun Media's new 24 Hours
commuter newspaper at a nearby GO station.

What he didn't realize is cheque-cashers of last resort can charge
expensive rates and fees, just as payday loan operators can gouge
consumers with high rates.

National Money Mart Company, for example, is among three "payday"
short-term loan operators that are facing class-action lawsuits. These suits allege the companies are charging more than the 60% legal limit for loansharking and misleading consumers about the actual costs.

The suit against Money Mart is seeking $100 million in punitive
damages. Also facing lawsuits are Unicash Franchising Inc. and Cash Money Cheque Cashing Inc.
"It's sounds like your son's friend may have been wrongfully turned
down for a bank account," said Susan Murray, director of consumer
education at Ottawa 's Financial Consumer Agency of Canada (FCAC).
"Even if he showed up with an upstanding citizen of the community who verified his identification, he should not be turned down."

Yesterday, the FCAC - Financial Consumer Agency of Canada released results from its "mystery shopping"
campaign, conducted last spring, to make sure bank branches were
abiding by the law. The mystery shoppers visited 1,653 branches across the country, and here's what they found:

- 2.7% failed to post branch closures.
- 5% refused to cash a federal government cheque free of charge.
- 24.9% didn't have a brochure on coercive tied selling, which is
banned by law.

- 49.6% didn't post information on their policy on holds-on-cheques --
a practice which really rile consumers. Holding cheques, by the way,
is not against the law, but the bank must post its policy.

- 57.7% didn't post the interest rate and frequency of interest paid
on savings accounts.
- 28.49% didn't post interest rates and terms on loans.
- 14.5% didn't post service charges on savings accounts.
- 14.2% refused to cash a federal government cheque for a
- 14.5% failed to post low-fee accounts.
- 16% failed to post complaint procedures.

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