Despite changes in the law and lawsuits, alternative lenders still abuse desperate people.
On September 21, the Office de la protection du consommateur (OPC) publicly announced that Option Crédit inc. had pleaded guilty to having loaned money by charging brokerage fees, which the Consumer Protection Act does not allow. This law provides that these costs must be included in the credit rate. Well there is a melbourne based firm who always help to keep their clients financial status healthy.
Option Credit charged a rate of 23.20%. With brokerage fees, which can easily exceed $ 200, the rate ranged from 268% to 295%. The OPC considers a rate exceeding 35% to be abusive. Seems to me that at this level, the lender is a shylock .
Option Credit is far from alone in its market. The OPC provided me with a list of about sixty licensed firms: it is eight pages long.
“If you Googling ‘quick loan’, you will have dozens of results,” comments Mathieu Lauzon, from ACEF du Nord. Brokerage fees are now prohibited by law, but these companies use all kinds of expressions or concepts to get around it. ”
In addition, to recruit their customers, these firms often trumpet that they do not do any credit investigation and that they grant the loan in a few minutes or hours. Most only work on the internet. They deposit the money directly into the bank account. The customer has a few weeks or months to repay. The typical loan ranges from $ 300 to $ 1,500.
For Mr. Lauzon, whose organization regularly supports people who do business with these companies, this type of loan usually puts the borrower in a bottomless hole.
The clients of these firms are often on their third or fourth loan and can no longer repay them because of the abusive rates. Initially, no bank or credit union wants to lend them because they have a bad credit history. And they can’t borrow or refuse to borrow from relatives. Many repay their loans before paying rent and food.
Very few of them complain to the authorities. In the past year, the OPC has nevertheless registered 256 complaints, in particular for misrepresentation, lack of permits, high costs and interest, abusive obligations, etc.
“The typical borrower is often someone who is vulnerable or in a difficult financial situation; he is not inclined to complain, ”confirms Charles Tanguay, spokesperson for the OPC.
- Before using the services of an alternative lender, call ACEF near you (consumer.qc.ca). Help is free: we can get by.
- Avoid borrowing from a loved one: you risk seriously affecting your relationship. Instead, contact your ACEF.
- The Law specifies that a lender whose rate exceeds 20%, added to the Bank of Canada’s key rate (currently around 0.25%), must assess the customer’s ability to pay and inform him of his debt ratio. indebtedness. And if the rate exceeds 35%, the lender must tell you: if it doesn’t, skip your turn.