Loan Application
Interest to be cut on payday loans
July 16, 2008
There will be less of a price to pay for payday loans when provincial legislation puts a cap on interest rate loans this fall.
The provincial government has approved the move to set maximum interest rates for short-term loans.
Finance Minister Greg Selinger notes the limits on interest rates charged by payday loan companies will be determined by the size of the loan.
"It's not an absolute cap. It says you can charge a certain amount for
certain sizes of loans," said Selinger. "I believe we've struck the balance between protecting consumers and having the short-term credit market available to them."
Local consumers say it's time for the government to put a stop to higher interest rates offered by lending companies.
"I think something should be done. It's just companies screwing them over and taking advantage of their situation. More people are taking out loans because of the high cost of living these days with gas prices what they are and everything. I think it's great that they're trying to put an end to it (high interest rates)," said Jamie Sokolowsky from Portage.
Selinger encourages people to find other sources of credit, such as their credit union or their bank, before they go to payday lenders. He believes, in most cases, they will get a better rate at a regular banking institution.
But consumers note there is a need for the payday companies for those who cannot get approved for credit at a regular institution.
"It's good for a lot of people who have no choice these days, facing expenses they can't keep up with. The price of everything is going up for all of us. It's about time the government started clamping down on interest rates," said Dolores Buchanan from Oakville, who noted she has never used a payday loan herself, but believes it is a vital service for those who need immediate finances and are not in a position to obtain credit from a bank.
Source : http://www.portagedailygraphic.com