Interpreting the Ontario Payday Loan Act

Blog Header- Interpreting PDL Act

As a payday loan borrower, you have some excellent rights and protection afforded to you in the province of Ontario (some of the best in the industry throughout the world!). We’re all about customer education, transparency and responsible lending at GoDay.ca, which means we want to help you understand your rights and responsibilities before entering into any agreement with us. The best way to do that, first and foremost, is to explain the provisions within the Ontario Payday Loan Act.

A general outline of what’s included in the Ontario Payday Loan Act:

  • The Government of Ontario has authority to set (in accordance with the regulations) a cap on the total cost of borrowing for a payday loan;
  • A description of the licensing system for all loan brokers and payday lenders;
  • An explanation of what’s prohibited in the industry (like concurrent and rollover loans);
  • The implementation of a “cooling period”, so borrowers can cancel a payday loan agreement without penalty and,
  • An explanation of punishment for offending payday loan lenders and brokers.

Basic Terminology

Borrower: An individual, a corporation, partnership, association, sole proprietor or another entity that receives a payday loan or has an interest in receiving one, aka: you! 

Cost of Borrowing: The total amount the borrower is required to pay when entering into a payday loan agreement. This includes your borrowed amount plus the fees and interest. It does not include default charges that the borrower might incur.

Default Charges: The charge incurred against a borrower who doesn’t make a payment as it comes due under their payday loan agreement, or doesn’t comply with another obligation they agreed to. This does not include interest on an overdue payment.

Lender: An individual, a corporation, partnership, association, sole proprietor or another entity that makes a payday loan to a borrower, aka: us! 

License: A license issued under the Ontario Payday Loans Act. A corporation, like GoDay.ca, is required to hold a license to be a lender in full compliance.

Payday Loans: An advancement of money in exchange for a PAD (pre-authorized debit), post-dated cheque or future payment of a similar nature.

Payday Loan Agreement: The agreement which a lender makes a payday loan to a borrower.

Key Things to Take Away

-If your payday loan lender does not have a license to operate, you are only required to repay the advance and are not required to pay cost of borrowing.
-The Registrar (licensing issuing body) can refuse to renew a license to a payday loan lender or broker should they not meet the prescribed requirements.
-The Registrar can also revoke a license should the payday loan lender or broker be in breach of the requirements. This suspension can be immediate if in the best interest of the public.
-A license isn’t transferable. For example, if our corporation “changed hands”, a new license would have to be issued.

For Your Protection

When shopping around for a lender, you want full disclosure of their terms and conditions. Look at the following as either good signs or red flags:

-Visibility of the license: if you’re at a retail location, it must be easily visible to the public. If online, well, this one’s easy. It should be, at the very least, on an application page.
-Any misrepresentation of fees, cost of borrowing, etc should be a red flag. No licensee is permitted to make false or misleading statements relating to your payday loan agreement or the payday loan itself. This applies to any statements, in print or otherwise.
-If you find you’ve been the victim of misrepresentation, you are only obligated to repay the amount borrowed.
-You have the right to cancel your payday loan agreement, without reason, up to the end of the 2nd day after the time the lender has approved your loan OR the next day that the lender is open for business following the 2nd if the business isn’t open on said 2nd day.

Example: You’re approved for a payday loan on Friday. You have until Sunday to cancel, but your lender is closed. Thus, you should be permitted to cancel on Monday.

-Your information must remain confidential unless you express permission to do otherwise. Read your terms carefully!
-You should be able to understand the language in your payday loan agreement. Your terms should be clear and obvious. If you’re uncertain, ask. Your potential-lender should have no hesitations when providing answers. If anything seems suspicious, just get out of there.

We’re Squeaky Clean!

Let’s be real here – If a payday loan company is taking time to educate you about your rights, chances are they’re okay to do business with. Sure, you might think, this is just another gimmick, but really, we don’t need one. Honesty and transparency is how we roll. Why bother making it complicated? If there’s even been the slightest moment where you had doubts about your current service provider, then come give GoDay.ca a try. We know the industry, and we agree with the measurements in place to protect you.

Sources:

ServiceOntario – Regulatory Registry 

Ontario Regulations made under the Payday Loans Act 2008 

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