Canadian Payday Lenders At Risk

Every week it seems that one of Manitoba's payday lenders is shutting its doors to the community. Such stores that have shut down in the recent week are Cheque Stop and MoneyMax with more lenders to share their destiny. But why are these super store payday lenders going out of business so quickly? New laws and regulations have been put into place. Less lenders are able to turn a profit which means their only resort is to close down shop. The Canadian Payday Loan Association had told council that payday lenders would be forced out of business if the restrictions on payday loans were too high, including lowering and capping interest rates. The new regulations were put into place on October 18th. The interest rate is now capped at 17 percent per one hundred dollars, or $17. Payday lenders normally take a fairly high percentage of one's salary in order to determine the maximum loan amount that can be given to this person. However, the new restrictions say that only 30 percent of one's net pay can be the loan maximum. Out of all of the provinces, Manitoba's interest rate is now the lowest. These restrictions were put into place in order to control high interest rates, poor business practices and vicious cycles of debt that very few borrowers are able to overcome alone.

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