Chilliwack asking for crack down on payday loan companies

The Attorney General of Canada is going to be getting a letter from the City of Chilliwack regarding payday loan companies. More of these businesses are popping up, and people in high poverty areas are being taken advantage of. Mayor Sharon Gaetz says the city is asking for a lower cap on the annual interest rates of these loans.

“I do know that as I read through the report, and I encourage people to go online and read through the material that came to council about some of the businesses in other communities that have been operating, the kind of abuses that have happened and the court cases that have happened.”

City Councillor Jason Lum says it’s becoming a problem in Chilliwack.

“Especially in areas of high poverty…it’s been proven in studies where there’s a high proliferation of store front cheque cashing and payday loan businesses in areas of high poverty, low income areas, the amount that they’re charging not only in interest but also in exorbitant fees.”

Lum has also asked city staff to look at ways they can better regulate these businesses at the municipal level.

“The expediency at which the federal government will amend the criminal code is probably not as fast as 10 or 12 more of these shops could set up right in our downtown, so I’d really like to see us take the bull by the horns.”

According to Pew Research, only 14% of payday loan borrowers can afford to pay back the loan on time, and that’s where the interest nails you….The average borrower is in debt for 212 days and as a result, in some cases a $325 loan is costing upwards of $800 by the time it’s paid back.