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Friday, February 12, 2016
Saskatchewan Justice

A “payday loan” is a short-term loan for a relatively small amount of money that is to be repaid at the time of the borrower’s next payday. To obtain a payday loan, a borrower usually provides the payday lender with a post-dated cheque or authorizes an automatic withdrawal from his or her bank account for the value of the loan, plus any interest, fees or other charges.

The Payday Loans Act sets limits on payday lenders and the cost of payday loans. For example, the legislation:

  • requires payday lenders to be licensed;
  • prohibits the total cost of borrowing from exceeding 23% of the amount of the loan; 
  • requires payday lenders with more than one location to obtain a separate licence for each location; 
  • includes loan brokers who broker payday loans within the definition of a “payday lender”;
  • allows the Director of the Payday Loans Division to require payday lenders to file financial security with the Director in an amount and form that the Director considers appropriate;
  • allows capital or other net worth requirements to be established for payday lenders;
  • requires an agreement to enter into a payday loan to be in writing and signed by the borrower;
  • sets out disclosure requirements to ensure that borrowers are able to make informed decisions about payday loans;
  • provides borrowers with the right to cancel a loan without penalty before the end of the business day following the date the loan was made;
  • prohibits the charging of any unauthorized additional fees when loans are renewed or extended;
  • gives the borrower the right to a refund of all money paid in excess of the total amount borrowed if a payday lender charges an amount in excess of the amounts permitted by the legislation;
  • prohibits discounting of payday loans;
  • prohibits a payday lender from charging a fee if the borrower repays the loan early;
  • prohibits the taking of any security in respect of payday loans;
  • prohibits a payday lender from making more than one loan at a time with the same borrower;
  • prohibits rollover loans;
  • prohibits more than one attempt to use a preauthorized debit to pay a loan unless the borrower consents in writing to one additional attempt by the payday lender;
  • prevents a payday lender from making a payday loan that is tied to the purchase of another product or service;
  • prohibits a payday lender from requesting or requiring a borrower to make an assignment of wages in relation to a payday loan;
  • prohibits loans for greater than 50% of the borrower’s net pay; and
  • extends the prohibited collection practices provisions in The Collection Agents Act to payday lenders.

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