Attention: News and Business Editors
February 6, 2009
Proposed Ontario Payday Loan Rate Astronomically High, Will Hurt Most Vulnerable Consumers in Economic Downturn
(OTTAWA)— The Public Interest Advocacy Centre (PIAC) today condemned the Ontario Maximum Total Cost of Borrowing Advisory Board’s proposed payday lending rate as “astronomically high”. The report, released today, “Capping Borrowing Costs – A Balanced Approach to Payday Loans in Ontario” is anything but balanced and is instead a gift to payday lenders at the expense of Ontario’s most vulnerable consumers – just as Ontario enters what may be its largest economic downturn, said the consumer group.
“This report proposes not only burying Ontario’s most needy and vulnerable consumers under new mounds of debt but has picked out the most expensive casket for them” said John Lawford, Counsel at PIAC. “We urge the Ontario Cabinet and the Minister of Small Business and Entrepreneurship to reject this astronomically high proposed lending rate. Ontario consumers are feeling the economic downturn in record numbers and if they turn to payday loans at this rate they will never recover.”
Lawford noted that the report appeared more concerned with the profitability of the industry than the needs of people in Ontario that feel forced to seek a payday loan. “A $300 loan at this rate would cost $63 and if it were payable in 10 days, that would be an annual percentage rate of over 766%.” Under PIAC and Canada Without Poverty’s (formerly National Anti-Poverty Organization) submission to the Board, which also left a fair margin for such lenders to operate profitably, such a loan would cost about $28.
To review the joint Canada Without Poverty and Public Interest Advocacy Centre submission to the Board please visit:
LINK TEXT [pdf file: 0.32mb]
For more information, please contact:
John Lawford
Public Interest Advocacy Centre
ONE Nicholas Street, Suite 1204
Ottawa, ON K1N 7B7
(613) 562-4002×25 (Tel)
(613) 562- 0007 (Fax)