Posted February 22, 2021
When Betty Morrison moved to London, she was trying to escape a payday loan she couldn’t afford to pay back.
Now, she’s fighting the same cycle after turning to a high-interest loan to pay a $300 surgery bill for her dog. She feels stuck, taking out more and more payday loans from different lenders to try to catch up.
“Not everybody has family, not everybody has somebody they can depend on for that kind of money,” Morrison said.
“I had to pay for my dog or she would have died.”
She’s reached a breaking point. Morrison, 46, said she plans to seek credit counselling in hopes of tackling her debt.
“I can’t do it. I can’t afford payday loans anymore,” she said. “There’s no way to claw your way out.”
It’s a rising problem for people across the country, and a London advocacy group is calling for regulatory changes and alternative options for those that don’t have enough money to cover bills or emergency expenses.
Acorn Canada’s London chapter, a newly formed activist group, is calling on the federal and provincial governments to crack down on controversial payday lenders by lowering the maximum interest rate, ensure borrowers understand the terms of their loans, and create opportunities for people to access low-interest credit, among other recommendations.
The province regulates payday loan lenders, capping the fee they can charge to $15 for every $100 borrowed for two weeks. This amounts to an annual interest rate of 391 per cent.
London North Centre NDP MPP Terence Kernaghan said his party also is advocating for a borrower’s bill of rights.
“A lot of people feel they haven’t been informed of additional products, a lot are not aware of their repayment terms, and the majority of people are very uncomfortable with negotiating the rates,” Kernaghan said.
He’d also like to set the maximum interest rates set at an annual rate of 20 per cent, plus the Bank of Canada’s overnight rate.
“That leaves a room for these smaller companies to make profits, but not profits on the backs of people who are struggling.”
In London, Ward 3 Coun. Mo Salih pushed for tighter rules for payday loan shops, and city council tightened its business licensing bylaws in 2017. Payday lenders now are required to post interest rates in a highly visible location and hand over pamphlets on debt counselling and money management to anyone who expresses an interest in a loan.
A bylaw blitz the following year said all the businesses targeted had complied with the rules.
Acorn’s issue is also with the rising number of online options to get cash quick. That’s what Morrison used, turning to loans she could get easily online through cellphone apps amid the COVID-19 pandemic.
“People do need, even more so, to be informed of their rights and their repayment responsibilities,” Kernaghan said.
“You wouldn’t want someone to simply click through a few screens without reading the fine print and then find they’re paying exorbitant rates.”
Morrison said she feels like there is nowhere to turn for help.
“There’s no help for anybody who’s poor or even moderate income,” she said.
“There’s no middle ground anymore. There’s poor and there’s wealthy.”
Article by Megan Stacey for the London Free Press