Consumers taking out payday loans at any of Alberta’s more than 220 branches received a little extra protection after new rules took effect on Wednesday.
Lenders are no longer allowed to penalize consumers for prepaying their loans, are required to provide all loans with installment plans, and there are new restrictions on the number of times a lender can make withdrawals. pre-authorized.
Payday loans became regulated in Alberta on September 1, 2009.
The new rules are the next step in implementing the Act to End Predatory Lending Legislation that was introduced and passed this spring, the provincial government said in a statement on Wednesday.
The law also requires the government to encourage financial institutions and community groups to offer short-term alternative loans that are fair and accessible.
A payday loan is a loan of $ 1,500 or less that has a term of 62 days or less.
Under the new rules, lenders must allow borrowers to repay the loan over a period of 42 to 62 days, payments must be spread over at least three pay periods and must be roughly the same.
Lenders can no longer repeatedly attempt to withdraw pre-authorized debit amounts when funds are insufficient, or charge borrowers large fees when pre-authorized debits repeatedly fail.
After the failure of a pre-authorized debit, a lender may make an additional attempt to obtain the repayment by pre-authorized debit.
The amount of this additional attempt must be the same as that of the initial attempt, plus the NSF authorized charge and interest due on the default.
The additional attempt must be made within 30 days after the payday lender is notified that the initial attempt was unsuccessful.