OTTAWA— Canada’s payday loan companies will see windfall profits at the expense of low- and moderate-income people if governments don’t take immediate steps to tighten regulations on the industry, a new national report from the Canadian Centre for Policy Alternatives (CCPA) says.
“Payday lenders prey on the most economically vulnerable households in Canada,” says report author Ricardo Tranjan, CCPA political economist and senior researcher. “Ads like those that offer ‘$300 for $20’ for a two-week loan are concealing annual interest rates that can be as high as 391%, or even 652%, depending on the province—except Quebec where legislation is strict. With COVID-19 slashing earnings and hundreds of thousands of Canadians falling through the cracks of new income support programs, or waiting weeks for help, more people will fall victim to predatory lending than ever before.
“For the sake of low-income households, provincial governments need to tighten regulations on these companies immediately.”
Tranjan’s report, Swimming with the sharks: Poverty, pandemics, and payday lenders, is available on the CCPA website.
In 2016, the federal Survey of Financial Security estimated that 520,000 Canadian households (3.4 per cent of the total) had at least one family member who had used a payday loan in the past three years. Other key findings include:
- Tenant households were four times more likely than home-owning households to use payday loans.
- Single-parent households were almost four times more likely than two-parent households to use payday loans.
- Single-parent tenant households were six times more likely than the average household to use a payday loan (one in five had used them).
- Female-led single-parent households borrowed from payday lenders more often than male-led households did.
“There are more branches of payday loan companies in Canada than there are Shopper’s Drug Mart stores,” said Tranjan. “These businesses are the last-ditch financial institutions for people who can least afford the exorbitant interest rates they charge, and it’s time for governments to rein them in.
“Everyone deserves affordable banking options.”
For more information: Randy Robinson at [email protected] or 416-788-7003.