There is good news for people in Alberta
who take payday loans. Alberta government is planning on clamping down the greedy practices of the payday loan companies. The government will pass a new legislation in which highest rates of payday loan interests will go down to lowest in Alberta.
The present rate of interest charged in Alberta is $23 for every $100. The proposed legislation will reduce this charge to $15 and also provide the loan takers 42 hours of time before the interest rate starts to accumulate. The service minister of Alberta commented that this practice will certainly be most helpful for people with low income.
Payday Loans Alberta Interest Rates Change
“Presently, lenders charge a higher rate of interest particularly to those who can’t afford it”, Mclean added further on Thursday in the legislature.
This act will lower the high borrowing cost and ensure an alternative short term credit options and financial assistance available for the Albertans. Experts say that most of the people who take pay loan are poor people. The annual rate of interest on some of these loans comes up to 600%.
Officers have predicted that this latest bill will cut down this rate from 88 to 130 percent.
Jeff Loomis of Momentum working for low income Calgarians said that this change would definitely help the borrowers in repaying their loans easily.
One of the major challenges while borrowing a payday loan is that one has to return it in a span of two weeks; it is very difficult for people with restricted income. Plus if they don’t return in time the interest rate starts to multiply say Loomis.
Bill baker working for a payday lending company with more than 28 Alberta` locations told CBC news that the company was very disappointed with this latest legislation. He also added that this act will limit the availability of payday loans for people in Alberta.
Also, this law effectively decreases revenue by 34 % which will force him to close his company at several locations.
The president of the Alberta Urban Municipalities Association, Lisa Holmes applauds the change. She says that this act will demand the lending companies to reveal the costs upfront and also give details of the financial options that borrowers can use.
Economy of Alberta is needs a boost; we can see people laid off. More and more people are applying for these types of loans so it is essential to protect them.
The lower rates of interest should come into effect by coming summer.