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City of Toronto No Longer Issuing Payday Lender Licenses – What This Means for Same-Day Loans

The City of Toronto is no longer handing out licenses to payday lenders.

In October of 2019, the City of Toronto council voted unanimously to stop issuing licenses to payday loan outlets.

Councillors said the payday lenders are “predatory” toward low-income residents.

“We heard over and over and over again stories of how people’s lives were ruined, leading to depression, broken families, even suicide, because they were victims of these predatory, parasitical payday lenders,” Coun. Josh Matlow said in Toronto council chambers before the vote, as quoted by CBC.

Payday lenders offer short-term loans as advances on paycheques and often don’t require a credit check. However, while this allows people to get same-day loans even with a bad credit score, it comes with a lot of consequences.

First, payday loans usually must be paid off in a short timeframe, normally 14-to-62 days. Second, the fees and interest are much higher on a payday loan that anywhere else. A 2018 City of Toronto report found that customers who borrow money from payday loan outlets pay fees of 390%, far higher than those on a credit card.

Because of the high fees and short payment terms, many people end up taking out payday loan after payday loan.

“People can never escape the vicious cycle they get into because they can never get out of having to pay off these debts,” Matlow said.

In addition to limiting the number of outlets, payday loan establishments are prohibited from advertising on city-owned property, such as the TTC.

“Their services shortchange those in need,” Coun. Anthony Perruzza said, as quoted by CTV News.

“We want the public to seek the financial empowerment supports that help them make better decisions, not to be taken advantage of when they’re in a desperate situation.”

Great job, City of Toronto, on passing this vote!

Alternatives to Payday Loan Outlets

The move to limit payday loan outlets is a positive one. However, many people still need access to credit and may not be eligible at a traditional bank. For instance, those who are self-employed or have a bad credit score might have turned to payday loans because they weren’t aware of other options.

Luckily there are alternatives to payday lenders that are much better for your finances.

One of these alternatives is an equity lender. Equity lenders offer personal loans based on security, not your past. They use equity in an asset — such as a home or a car — as collateral instead of your credit score. And many also report to the Canadian credit bureau so you can repair credit too.

In Toronto, Prudent Financial offers equity loan solutions, including bad credit loans. Our loans report to the Canadian credit bureaus, so they can help rebuild credit. What a payday loan charges in two weeks-to-one-month is almost the same as what Prudent charges in a whole year.

If you’ve been relying on payday loans and want to stop the cycle or need a bad credit loan that helps you in the long-term, get in touch today. At Prudent Financial, we offer free consultations to see if you qualify for our services.

Call 1-888-852-7647 or visit www.prudentfinancial.net.

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