In Canada, Newfoundland is among the provinces that have capped their maximum interest rate at 21% per $100 borrowed. Like other provinces, the Newfoundland provincial government is yet to impose any harsh payday loan regulations. With higher fees associated with a payday loan, rolling over of loan was prohibited in Newfoundland, a direct result of the new regulations that came into effect on April 1, 2019. Assuming a two-week loan, Newfoundland and Labrador’s rate is the equivalent of an almost 550% annual interest rate. In 2010, Newfoundland made an announcement that payday loans will not be allowed. On June 16, 2010, the provincial government of Newfoundland says it will not be regulating payday loan companies, thereby making them illegal.
In December 2016, new legislation was passed to increase awareness of consumer’s payday loan agreement rights and to protect consumers who make use of the payday lending services. The 2016 legislation serves the following purpose:
- A reduction in the borrowing cost
- Terms, information, and disclosure statements to be included in the payday loan agreement
- The right to cancel a payday loan during a cooling-off period
- Provision of remedies to borrowers when payday lenders do not honour their legislative obligation
- Certain payday lenders were prohibited
New Payday Loan Regulations
In April 2019, new regulations for the Newfoundland loan industry took effect. The new regulations will permit payday lenders who lend $1500 or less within a 62-day period to set borrowing limits while making sure that there is adequate awareness. The new laws also require payday lenders to obtain a license from the provincial government. They were required by law to definitely provide a duplicate of these standard cash advance contract to the Director of customer Protection and Business methods, which also include their price framework for an online payday loan, and their cancellation type.