Ontario alone has over 50% of total Canada payday loans in Canada. According to the 2007 directives issued by the federal government, provincial or state governments have to take decision regarding regulation of payday loan businesses. Such steps are needed for effectively managing these businesses. If you are looking to take a short term loan a good understanding of these regulations becomes quite essential.
The Need for Regulations
Increasing dissatisfaction among borrowers for various lending companies is a prominent reason for issuing above mentioned guidelines. The government’s decision is a reflection of its will to have a concrete and transparent system for the business. There are many shortcomings in present system that can be corrected only with the right approach and by making clear rules. With a commitment to make Canada payday loans much transparent and easier, the government came up with the Payday Loans Act, 2008. The act provides for better measures to protect all you consumers. Some of the key provisions of the act are mentioned below. To understand the rules clearly, these provisions shed some useful light.
Compulsory Licensing System
From now onwards brokers as well as lenders would require license to carry out their short term loan business. At the same time it is their responsibility to furnish all important information online. Moreover, their license should be clearly seen at their store.
No Requirement for Wages Assignment
New regulations ban the practice of requiring wages assignment. Now the lender is not allowed to ask you to furnish such documents for obtaining a Canada payday loan.
Ban on Rollover Practice
Rollover of debts means obtaining new loans despite not repaying the earlier ones. Under new regulations no lender can resort to this practice.