In Canada, there are over 1,300 payday lending outlets offering extremely costly but fast and effective methods to borrow short-term money. Payday loan providers charge between $15–25 in costs per $100 lent for a fortnight, leading to yearly portion prices of up to 500 %. In comparison, Canadian legislation prohibits other loan providers from charging significantly more than 60 % yearly interest on loans.
The use of payday lenders continues to increase despite the high cost of borrowing.
From 2009 to 2014 (latest available numbers), the sheer number of Canadian grownups that reported employing a cash advance increased from two % of households to four per cent, borrowing almost $2.2 bn worth of loans in 2014. Customers typically use payday lenders as being a short-term fix when they’re in need of assistance of money to cover a future bill or an expense that is unexpected. But, due to the fees that are high many become stuck in a period of financial obligation.