Patrick Mohan of the Independent Payday Loan Association of Canada said he’s noticed a similar trend
Pushing for change
Acorn Canada, a national organization that advocates for low-income people, has taken aim at large payday lenders, organizing protests across the country and calling on the federal government to take action.
Donna Borden, vice-chair of Acorn’s East York chapter in Toronto, said the pandemic has forced more Canadians to turn to high-interest lenders.
“A lot of people are using or taking these loans to buy food, to pay their rent,” she said. “And especially now with COVID, it’s even worse.”
Instalment loans, where regular repayments are scheduled over a number of years, were the fastest growing segment of lending among payday companies, according to the results of a limited online survey conducted by Acorn in February. It found that the number of survey respondents who reported taking instalment loans had jumped from 11 per cent in 2016 to 45 per cent in 2020.
“There has been a significant and sustained payday advance Lebanon drop in the number of loans taken out by Canadians,” the CCFA said in its statement to CBC News.
“We’re still down 35 to 40 per cent,” he said, referring to the level of demand he sees. “Things are coming back a little bit, but people aren’t spending as much and they don’t need to borrow.”
‘A gold mine’
Independent Sen. Pierrette Ringuette of New Brunswick has sponsored two bills to have the Criminal Code amended to lower the maximum interest rate that lenders can legally charge from 60 to 20 per cent plus the overnight bank rate. Neither bill moved forward due to prorogations and election calls, but Ringuette said she intends to sponsor another one.
“Canada is like a gold mine to these institutions because of the current state of legislation we have in place,” she said.
She said a number of American states have put a lower cap on interest rates charged by payday lenders, yet they continue to be profitable.
“If they can serve in the U.S. states where, on average, you would have a 10, 12 or 15 per cent capped interest rate, they can serve Canadians at 20 per cent very well,” she said. (altro…)