Payday loans are short-term loans usually up to $1,500 that can help individuals get through a rough spot. They are called payday loans because typically, they are paid back on the next pay day. Oftentimes, people use these types of loans to pay for things if they run out of money before their next paycheck.
Payday loans can be expensive, so they’re best to be avoided if possible. Check out 5 payday loan alternatives and see if any of these might be a fit for you.
If you must use a payday lender, be sure to use a licensed one. With the rise of Internet usage, several new payday loan companies are popping up online, and the majority of them aren’t regulated.
If you’re looking for a payday loan in New Brunswick, be sure you know your rights ahead of time. The government of New Brunswick has rules in place to protect you when dealing with paying back a payday loan.
Unfortunately, these rules are only able to be enforced if you’re dealing with a licensed payday lender, so it’s important to ensure that any lender you’re using is licensed in New Brunswick.
List of licensed payday lenders
There are currently only five licensed payday loan companies in the province of New Brunswick:
- Loan Express
- Money in Your Pocket
This list may change so it’s best to always check the government website’s list of licensed payday lenders before using a payday loan company. If you see a payday loan company advertising in New Brunswick and they are not one of the ones listed on this website, they are not licensed in the province.
Unlicensed payday lenders in New Brunswick
The following companies are not legally licensed to provide payday loans in New Brunswick and should be avoided completely.
Know your rights
Know your rights before taking out a payday loan in New Brunswick. It’s important to note that these rights can only be protected when you use a licensed payday lender in New Brunswick. Here are the regulations that licensed payday lenders must adhere to:
- You have the right to pay the loan back early or prepay the outstanding balance at any time without additional charges or penalties. You will still be required to pay the cost of borrowing even if you pay the loan back before the due date. Each payday loan agreement must have statements that explain this.
- You can make partial prepayments without additional charges or penalties on any scheduled payment date.
- You can borrow up to a maximum of 30% of your after-tax pay from your most recent pay stub, up to $1,500. For example, if your paycheck is $2000 after taxes, the most you can borrow is $600.
- The maximum interest you can be charged is $15 for every $100 you borrow. If we use the above example, a lender can only charge you $90 in interest on that $600 loan.
- If you can’t pay your loan back, the most the payday lender can charge you as a penalty is 2.5% of the total amount of the loan per month.
- Penalties for non-payment cannot be compounded and can only be charged once in a 30-day period.
- Penalties for a dishonoured cheque or pre-authorized debit cannot be more than $20 each.
- The maximum amount that a lender may charge as a cheque cashing fee is $5 for a government cheque less than $2,500, or $10 for a government cheque greater than $2,500.
- A payday lender can’t force you to sign over items that you own, such as your car or house, for the payment of a payday loan.
- A payday lender cannot take or accept the following as security for the payment of a payday loan:
- real or personal property (such as your car or house)
- an interest in real or personal property
- a guarantee
- A payday lender can’t garnish your wages.
- No payday lender can make you sign a document that allows them to go to your employer to collect the money for your loan.
- A payday lender can’t contact your employer and can’t contact you at work.
- If a payday lender does not follow these regulations, they are likely not licensed. If a lender is not licensed, you do not have to pay any interest.
For more information on payday loans in New Brunswick, visit the government website.