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Payday loan survey | |||||||
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(Greater Toronto area for 14-day loan) |
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Loan
|
APR2 to borrow $100 |
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Lender | Minimum |
Maximum |
Fee as stated |
Roll over |
Graduated lending scheme1 |
For 7 days |
For 14 days |
% |
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A | $100 |
Up to 30% of customer’s next pay |
1% face per week + $12.99 item fee (item fee waived if repaid before next payday) |
No |
No |
727 |
390 |
B3 | $115 |
$225 |
2.5% of face + $1.99 item fee4 + $9.95 loan fee |
No |
Yes |
670 |
335 |
C | 30% net up to $300 |
Flat fee $15 per $100 |
Yes |
No |
780 |
390 |
|
D | $100 |
$500 |
Graduated flat fee $20 for $100 $30 for $200 $40 for $300, etc. |
No |
Yes, will lend more and decrease charge/$100 |
1,040 |
520 |
E | Representative would not talk over the phone |
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F | $200 |
Depends on familiarity with client |
Flat fees $5 + $20 per $100 (fee + administration charge) |
No |
No |
1,300 |
650 |
G | $100 |
$500 |
Graduated flat fee |
No |
No |
1,300 |
650 |
H | $100 |
$1,000 |
Flat fee $20 per $100 |
No |
Yes |
1,040 |
520 |
1 The outlet will initially loan a minimum amount, increasing as the customer becomes a regular client. |
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2 The annualized percentage rate (APR) is the nominal not effective rate. The nominal method is used for calculating consumer loans in North America and Europe, excluding the U.K. The effective method, which is a more complex actuarial calculation, is used in calculating the criminal rate of interest under section 347 of the Criminal Code. The effective rate would be significantly higher for short-term loans. |
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3 Cost of loan: (2.5% of $115) + $1.99 + $9.95 = $14.82; $14.82 ÷ 115 = x ÷ 100 –> x = 12.89; APR then calculated for 7 and 14 days. |
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4 An item fee is charged on the entire amount, not for each $100 borrowed. With an item fee, borrowing $100 has a much higher APR than borrowing a larger amount. |
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Source: Ramsay, Iain. Access to Credit in the Alternative Consumer Credit Market , 2000 |