Robbie McCall started using payday loans after he fell ill and could no longer work. His disability checks weren’t enough to get by.
He says it took him nine years to pay off a $ 200 loan.
“The first was actually $ 20,” he says. The streamis Anna Maria Tremonti.
“I have limited income, don’t I? So by paying it back, I found myself without money. I had no choice but to borrow again. “
McCall says when the loan fees started to pile up, he borrowed from another payday lender and the avalanche of fees started to pile up.
“It was $ 100 more each month to pay the fees,” he says.
As of this week, Ontario is passing regulations for high-cost lenders with a cap on the amount businesses can charge for loans. The fees were lowered to $ 15 per $ 100 of loan, from $ 18.
Other provinces have similar caps. But even so, interest rates can still total over 200 percent per year.
McCall calculates that the interest on his nine-year loan is $ 31,752. He tells Tremonti he just finished paying with the help of a CBC auditor in Ottawa who offered no interest.
“She ended up paying my loan for me and I was able to pay her off without the item charges,” McCall said.
The new regulations reducing loan fees are a good start, McCall says, but he says it’s not far enough.
“I would love to see the Criminal Code… lower it to a maximum interest rate of 30 percent from 60 percent,” he told Tremonti, suggesting there should be a national tracking system. real-time or database in place to help stop payday rollover loans.
“In an area of one kilometer in Ottawa, in a low income area, there are 22 visible payday lenders … that’s a bit of a lot.”
Listen to the full segment at the top of this article – including the hearing of the President and CEO of the Canadian Consumer Finance Association, formerly known as the Canadian Payday Loans Association. We also chat with Doug Pawson from Causeway, a non-profit organization that runs social enterprises in Ottawa.
The stream contacted the Canadian Bankers Association to respond to this segment. Here is an excerpt from their statement:
“Ninety-nine percent of Canadians have a bank account or an account with a financial institution. This demonstrates that banks in Canada offer accessible and convenient financial products in a regulated and reliable environment that can meet the needs of the vast majority of Canadians. include small, short-term loans and credit options that are a fraction of the cost of a payday loan.
The Canadian banking industry is deeply committed to working with clients who are facing financial difficulties. It is important to remember that there are always better, more comprehensive options for helping someone with debt than providing them with more debt or credit. “
This segment was produced by Karin Marley, Kristin Nelson and Julian Uzielli of The Current.