Payday loans have become very popular in many countries as they help in dealing with immediate financial crunches and emergencies in an excellent manner. Though the rates of interests of these loans are really high, people seek them as they are readily available without much documentation and paperwork.
Once the emergency situation is handled, the loan can be repaid back within the stipulated time period. With other countries of the world, payday loans have become extremely popular in Canada as well.
In Canada, the payday loan industry has been termed as ‘predatory’ in nature. Payday lenders are governed by some provincial regulations, which are about to expire in 2016. A social services agency in Calgary, Canada has pleaded the government for carrying out further restrictions regarding the payday loan industry in the country to save people from falling in the unending trap of these loans. Along with such agencies, Momentum Community Economic Development is also asking the municipal government to take stricter steps towards payday loan lenders.
Though demands of restricting payday loan lenders are high in Canada, yet, almost all the agencies agree to the fact that people should have access to instant financial solutions that they can avail during emergency situations. Other sources have to be made active so that when people need money in emergency situations, they can avail the same without any kinds of problems.
A report titled ‘The Real Cost of Payday Lending’ was released by Momentum Community Economic Development and it contained useful information regarding the payday loan industry in Canada. The report also includes the consequences of restricting these loans drastically.
Financial experts understanding the actual state of economy in Canada along with the payday loan industry in the country opine that the approach to the payday loan industry should be a bilateral one. Protection of consumers in the payday loan industry is the first way of approach.
The second way of approach is targeted at the financial institutions, the non-profit sector as well as the government so that they are able to fill in the gap that is caused due to strict rules and regulations. Attempts should be made so that people who need credit for short-terms should be able to access the same without any kinds of problems at reasonable rates of interest on annual basis.
There is a Criminal Code in Canada that has a national framework for payday loans. As per the code a payday lender can provide loans of maximum $1500.00 for a period of 62 days. The highest annual interest rate is 60%, but in some provinces higher rates of interest are also charged as the time period for giving the loan is only 2 months.
When people are in dire need of cash, they seek help from payday loans in Canada, but when it comes to high interest rates, the problems start arising. It has been seen that innumerable people fall trap to these payday loans in Canada. The main target of the payday loan lenders is people in the low income people in Canada.
Lots of discussions are being carried out regarding payday loans in Canada. Only future will say the fate of payday loans in the country.