'We're dancing in the streets' over payday loan changes, says credit counsellor

Enforcing regulations for payday loans will be difficult, but it will keep people from spiralling into troublesome debt, says the head of Credit Counselling Services N.L.

Al Antle, executive director of the provincial organization, has faith in the bureaucracy to make sure payday lenders follow the rulebookif the new legislation passes.

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Still, keeping tabs on the tricky stipulations and fees built into a loan will be difficult, he says.

"We're cognizant of the fact that regulating may be a problem, but we have confidence the system will do everything they can to do just that," Antle said. "[The consumer affairs division] isa little tiny division, a little tiny department, but they're very on the ball."

A new bill to limit the amount lenders could charge on a payday loan was debated in the House of Assembly on Thursday. While numbers have yet to be firmed up, the bill would likely allow lenders to charge $21 per $100 loaned to customers.

It will also stop lenders from rolling owed money into a second loan a process that can cause debt to pile up exorbitantly.

"That's the thing that really, really excites us," Antle said, noting a simple $300 loan could end up costing someone upwards of $550 within a month under the current lack of regulations.

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Part of the reason people fall into trouble with payday loans is the way the deals are structured, Antle said. It is not a simple interest rate, like at a bank, but a combination of a high interest rate and a bevy of fees for things like submitting and processing an application.

"Customers don't ask these questions," Antle said. "When you're desperate, you'll accept almost anything."

While the actual interest rates will still be as high as 50 per cent, the new legislation would limit the amount charged for fees.

"We have been battling, for want of a better word, with this consumer practice for as long as it's existed," he said. "We're dancing in the streets this morning with this regulation change. This is a very good thing for people."