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Payday Loan Tips

SHOP AROUND: Different lenders charge different rates

PAYDAY LOANS ARE HIGH-COST LOANS: But not every lender charges the maximum allowable rate.

RESIST THE HARD SELL: The lender cannot make you pay for any additional services (a cash card, credit card, bank account, insurance, etc.) before giving you a loan.

MAKE SURE YOU'RE NOT BORROWING MORE THAN YOU MEANT TO: Read your agreement. Make sure that the amount you're signing for matches what you asked to borrow. Don't pay for extras by borrowing more money.

Payday Loans

If you are squeezed for cash you may be tempted to apply for a payday loan – but make sure you know your facts before you do. Payday loans are high-cost loans. The maximum allowable cost of borrowing is $25/ $100 in Nova Scotia.

Payday loans are usually due to be repaid with the next pay cheque you receive. Lenders may charge different rates if you're able to pay the loan back sooner. If you cannot afford to make the full repayment with your next cheque, you may be faced with more fees and interest.

The provincial government regulates the lenders who make these loans. They are licensed and must follow several other rules.

  • The maximum cost of taking out a payday loan is $25 for every $100 borrowed
  • The maximum charge for missing a payment is $40. You can also be charged up to 60% interest (annual interest rate) if you pay late.
  • Look for a sign at the lender's place of business that shows the cost of borrowing.
  • This is calculated on a $300 loan due after 14 days.
  • The calculations must show the total that must be paid and the annual interest rate.

The cost of borrowing was reduced by the Nova Scotia Utility and Review Board, effective April 1, 2011. You can read the decision, which includes several other recommendations, at the UARB web site.