Payday Loans around the World – Chapter 10
- Payday loans in Quebec are heavily regulated
- There are 32 instore and 10 online payday lenders in Quebec
- Every loan must come with a written contract.
Payday loans in Canada are permitted under section 347.1 of the Criminal Code. In 2006, Parliament amended the Criminal Code to allow the provinces to regulate the payday loan industry. In conjunction with the federal law development, most provinces introduced their own legislations of payday loans. Payday loans in Quebec are regulated with sections 66 to 117, 321b and 322 of the Consumer Protection Act, which are specifically related to money lenders. Articles 18, 32-34, 65-67 and 84 of the Regulation under the Consumer Protection Act also apply to money lenders. The body responsible for regulation of payday loans in Quebec is the “Office de la protection du consommateur”. Quebec passed legislation that capped loan rates at 35%, which is less than the Section 347 limit.
Market and Industry Research
In Quebec, there are three different types of money loans that require a license from the Office of Consumer Protection:
- Pawn-broking – A credit agreement that allows the borrower to obtain a sum of money in exchange for item(s) they deposit.
- Money loan payable on demand – The cash loan payable on demand has no date of return of capital. The borrower is required to pay finance charges on a schedule, but the principal repayment is due at the request of the lender.
- Payday loan – A small short term loan, typically due on the borrower’s next payday. Payday loans in Quebec are limited by usury laws, which declare that any effective rate of interest charged above 60% per annum is considered criminal.
There is not a big amount of official market and industry data available when it comes to Quebec. Below is the chapter that will analyze the competition in the payday loan industry in Quebec.
Based on the Quebec “Office de la protection du consommateur”, there are currently 164 money lenders in Quebec. According to the tonpreteur.com, in Quebec there currently exist 32 payday lenders. Some of the companies offer only installment loans with a longer pay term than payday loans, but we will still review them. We have compiled a list of all the lenders together with a few details about each lender.
We will start with a look at the five lenders with the highest rating on the website:
|Loan amount offered||APR|
|Mini Prêts||up to $500||24%|
|Crédit 24||$500 to $850||27.11%|
|Argent Direct||up to $750||28% to 32%|
|Prêt sans Enquête||$300 to $500||28% to 32%|
|Crédit Yamaska||$500 to $1000||15.47%|
We will now examine these five in more detail:
- Mini Prêts – Mini Prêts is a Quebec company offering loans to individuals wishing to get out of a bad financial situation quickly. They offer loans up to $500 and APR of 24%.
- Crédit 24 – Loans range from $500 to $850 with APR of 27.11%. Loan term is between 3 and 5 months. A loan of $700 payable every two weeks and repayable in 8 installments will cost you $130.22 in interest and charges, coming out to a total of $1,041.76. Service 100% Canadian and bilingual.
- Argent Direct – Argentdirect.com is a brokerage company doing business with several lending companies. Its goal is to find personal loans for its clients, whether they have good or bad credit. They provide loans of up to $750 with APR from 28% to 32%.
- Prêt sans Enquête – Offers loans of $300, $400 and $500 with APR from 28% to 32%. They request the repayment within three months of the start of the loan. Their loans do not automatically renew. The borrower’s credit rating will remain unchanged if they repay their loan within the stipulated time.
- Crédit Yamaska – Established in Saint-Hyacinthe several years ago. Offers loans from $500 to $1000 and APR of 15.47%.
Other listed companies:
Another source that was used is the “Consumer Experiences in Online Payday Loans” report provided by the Consumer Council of Canada. Below are presented the online lenders that operate in Quebec:
- www.mycanadapayday.com/ – Offers loans up to $1,500 with a maximum loan term of 60 days.
- cashone.ca – Offers loans up to $1,500 with APR of 546% on a 14-day loan.
- privateloanshop.com – Loans from $100 to $2,000 and APR from 200% to 600%.
- paydayking.ca – Offers loans up to $1,000 and APR of 546%.
- www.creditclubloans.com/ – Offers loans from $100 to $1,500 with APR ranging from 180% to 546%.
- crediteck.ca – Their loans range from $100 to $1,500 and the charge rate for Quebec is 23%.
- Paydayloans-on.ca – Offers loans up to $1,500 and maximum loan term of 30 days.
- www.ezcashnow.ca – Maximum loan amount is $1,000. On a 14-day $300 loan, the APR is 546%.
- capitalcash.ca – Offers loans up to $1,500, and APR on a 14-day loan is 546%.
- northnloans.ca – Loan amount ranges from $100 to $1,500.
In the next chapter we will present the regulations and rules regarding the money lenders and especially of payday loans in Quebec.
Laws About Payday Loans in Quebec
As mentioned above, payday loans in Quebec are regulated with the Consumer Protection Act and the Regulations of the Consumer Protection Act. In Quebec, every company that offers loans to borrowers must be licensed from the Office of the Consumer protection. Every license costs $320 for two years. Every time money is lent to a consumer, a contract must be written. Every contract must state the following:
- the contract signing date
- the place of signature of the contract
- lenders name, address and license number
- the name and address of the borrower
- the borrowed sum of money
- credit costs. This is an amount of money including all fees must pay the borrower in excess of the amount of the loan. Credit costs include interest, administration fees, brokerage, warehousing, insurance, etc.
- credit rate. This is an annual percentage indicating the credit charges. The contract must include one credit rate, usually less than 35%
- the consumer’s total obligation, the amount borrowed and all credit charges
- the date and amount of payments required total loan repayment, and their number
- the date the borrower receives the money
- the description of the pledge left, if any
- the signatures of the lender and the borrower
The lender also must determine with the borrower the date of the first payment, along with signing the contract. Credit charges shall accumulate between the date of signing the contract and the beginning of the period the first payment is expected. Payments must be equal. Only the last payment can be smaller.
This section of the regulations seems to be stressing the importance of the borrower understanding exactly what is expected of him when dealing with payday loans in Quebec, and what will happen if he does not pay. This is in line with the current policies in the UK where the Financial Conduct Authority is trying to promote honest payday loan companies in the UK, through insisting that all terms and conditions be made clear beforehand.
There are rules for the companies advertising payday loans in Quebec.
Once this advertising includes one of the following, it shall contain all of the other elements:
An advertisement may relate to either credit, or a product/service, but not the two at once. In other words, it is prohibited, in an advertisement on credit:
There are also some prohibited practices regarding the money lenders:
The borrowers has the right to cancel the loan within 2 days if they so desire. If the lender has not complied with the law, the borrower may request either the cancellation of credit charges or a contract termination.
The contract should also include a reference for the borrower: