License
A payday lender must prominently display a copy of the licence in each location named to which the licence pertains.
If the payday lender engages in the payday loan business by means of the Internet, the payday lender must display a copy of the licence, prominently at or near the top of the introductory page of the website for Alberta borrowers.
Cost of a Payday Loan
- The maximum amount of a payday loan is 14 dollars for every hundred borrowed
If you borrowed $200 dollars it would cost $28 dollars and you would pay back $228
- If the loan is not paid on time, overdue interest of 30% per year can be charged.
- A fee of 20 dollars can be charged for an NSF(bounced payment)
Borrowing Rules
- A Payday Loan cannot be more than $1,500
- Installment Payments: A payday lender must offer you an installment plan to pay back your loan. They must give you at least 42 days to repay it, but no more than 62 days.
How Repayments are Spread Out:
This part depends on how often you get paid:
- (a) If you get paid twice a month, every two weeks, or more often: Your repayment schedule must spread your payments out over at least three of your pay periods. So, you won’t have to pay the whole thing back in just one or two paychecks.
- (b) If you get paid less often than that (e.g., monthly): Your repayment schedule must spread your payments out over at least two of your pay periods. Again, this gives you more time to manage the repayment.
These rules are in place to give you more time to repay your payday loan in installments, making it less likely to create a financial strain on a single paycheck.
Prohibited Practices
- A Payday lender must not:
- Charge any fees other than the ones listed above under “Cost of a payday loan”
- Require or accept an assignment of wages
- Require or use a borrowers personal information for any purpose other than providing a payday loan.
- Make a payday loan contingent on the supply of other goods or services
This rule means a payday lender can’t force you to buy something else or use another one of their services as a condition for getting a payday loan.
For example, they can’t say, “We’ll give you the $100 loan, but only if you also sign up for our monthly credit monitoring service.” Getting the loan has to be a separate decision from buying anything else they might offer.
- Rollovers: There are two types of rollovers and neither one is allowed
1) imagine you have a payday loan due. Instead of paying it back, you ask the lender to give you more time. But for that extra time, you are charged more fees on top of the overdue interest.
2) Imagine you have a payday loan due. You ask the payday lender to give you a second loan. The lender agrees, but takes that money and uses it to pay off the first loan.
- Discounting a Payday Loan: “Discounting a payday loan” refers to a practice where the lender deducts the fees or interest charges before giving you the principal loan amount.
Here’s how it works:
- You need: Let’s say you need to borrow $300.
- The lender’s fee: The lender charges a fee, for example, $42 for the two-week loan.
- The “discount”: Instead of giving you $300 and then expecting you to repay $342, they “discount” the loan by deducting the $45 fee upfront.
- What you receive: You would only receive $258 ($300 – $42).
- What you repay: You are still obligated to repay the full $300 on your next payday.
Why is this called “discounting”? It’s called discounting because the cost of borrowing (the fee) is taken “off the top” or “discounted” from the principal amount before you receive it.