Read the segment transcript
Robbie McCall started using payday loans after falling ill and not being able to work. His disability checks weren’t enough to get by.
He says it took him nine years to pay off a $200 loan.
“The first one was actually $20,” he says. The flowis Anna Maria Tremonti.
“I have a limited income, don’t I? So by paying it back, I had no more money. I had no choice but to re-borrow.”
McCall says when the loan fees started piling up, he borrowed from another payday lender and the avalanche of fees started piling up.
“It was an extra $100 every month to pay the fees,” he says.
As of this week, Ontario is putting in place high-cost lender regulations with a cap on how much businesses can charge for loans. Fees have been lowered to $15 per $100 loan, down from $18.
Other provinces have similar caps. But even so, interest rates can still rise to more than 200% per year.
McCall calculates the interest on his nine-year loan to be $31,752. He tells Tremonti that he just finished paying him back with the help of a CBC listener in Ottawa who offered no interest.
“She ended up paying my loan for me, and I was able to pay her off without the purchase expense,” McCall said.
McCall says the new regulations lowering loan fees are a good start, but he says it’s not far enough.
“I would like to see the penal code … lower it to a maximum interest rate of 30% instead of 60%,” he told Tremonti, suggesting there should be a national tracking system. real-time or database in place to help stop payday loans.
“In a one kilometer area in Ottawa, in a low income area, there are 22 visible payday lenders…that’s a bit much.”
Listen to the full segment at the top of this article – including hearing from the President and CEO of the Canadian Association of Consumer Finance, formerly known as the Canadian Payday Loan Association. We also chat with Doug Pawson from Causeway, a non-profit that runs social enterprises in Ottawa.
The flow contacted the Canadian Bankers Association to respond to this segment. Here is an excerpt from their statement:
“Ninety-nine percent of Canadians have a bank account or an account with a financial institution. This demonstrates that banks in Canada offer accessible and convenient financial products in a regulated and trusted environment that can meet the needs of the vast majority of Canadians. include small, short-term loans and credit options that are only a fraction of the cost of a payday loan.
The Canadian banking industry is deeply committed to working with customers who are experiencing financial difficulties. It’s important to remember that there are always better, more holistic options to help someone struggling with debt than providing them with more debt or more credit.”
This segment was produced by Karin Marley, Kristin Nelson and Julian Uzielli of The Current.