Payday loan borrowers are protected under the Payday Loans Act of 2008. This law maintains that a borrower cannot be offered any goods or services related to the payday loan. A borrower always has the right to cancel their payday loan contract within 2 business days WITHOUT financial penalty and without providing a valid reason. Finally, this law also states that rollover payday loans are not permitted: one cannot obtain a payday loan from the same lender without having first paid off their initial loan in full.
Rules for Payday Lenders
When it comes to payday lending, the borrower must follow certain rules and regulations in order to comply with their loan terms. However, when it comes to the lender, they also have rules to respect. Payday lenders must be licensed with the Government of Ontario and respect the regulations fixed in the Payday Loans Act of 2008. Your lender must always include specific information on the first page of your loan contract that includes: the borrowed amount, the length of the loan (in number of days) and the amount to be charged in order to borrow the requested sum. Your lender does not have the right to request or accept loan repayment through automatic paycheque deduction, or assignment of wages. Your lender has a responsibility to keep you properly informed and must offer you a flyer as well as display a poster describing the costs over time of requesting a payday loan. Even if you haven’t respected the terms of loan repayment, you should know that your lender doesn’t have the right to contact you more than three times per week and may not contact you on holidays. They have no right to contact your spouse, relatives, friends or neighbours. They may not contact your employer(s) or acquaintances at any time, for any reason. This also means that your lender cannot use threatening or intimidating language when they contact you, nor can they use unreasonable measures of pressure to force you to pay. Your lender is not allowed to process your post-dated or pre-authorized cheque more than once, especially if this results in your financial institution charging you extra fees for insufficient funds or overdrafts. Keep in mind that if this does occur, you have every right to recover these financial amounts from your lender and this annuls the responsibility of paying the cost of borrowing the loan.
Extended Payment Plan
The option for an extended payment plan also exists as of the July 1, 2018. If you request and receive three loans within a 63 day period, the lender must provide you with this option. Entering into an extended payment plan allows you to make prepayments any time you like, incurring an extra charge or penalty. It also gives you the right to end the extended payment plan at any given time without being penalized. In almost all cases, a borrower has the right to repay their loan in equal instalments over multiple pay periods. The amount paid per period is determined by how frequently you receive your paycheque. Whether you are paid on a weekly, bi-weekly, or monthly basis, your payment installments must be scheduled over at least two paydays and the maximum amount of each payment is 50% of the combined total of the loan and the cost of borrowing.