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 Nova Scotia, be sure you know your rights ahead of time. The government of Nova Scotia 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 Nova Scotia.
List of licensed payday lenders
The following companies are licensed payday lenders in the province of Nova Scotia:
- Cash Money
- Expefinancial Services Ltd.
- Loan Express
- M Direct Financial
- Major Cash
- Money Mart
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. Any company not on this list should be avoided completely.
Know your rights
Know your rights before taking out a payday loan in Nova Scotia. It’s important to note that these rights can only be protected when you use a licensed payday lender in Nova Scotia. Here are the regulations that licensed payday lenders must adhere to:
- Payday lenders can only charge a maximum of $19 for every $100 borrowed, as long as you pay back the loan on time. For example, if you borrow $600, the maximum interest you can legally be charged is $114.
- If you do not repay the loan on time, you will be charged interest on the amount you owe. The interest rate cannot exceed 60% and you may also be charged a default penalty of up to $40.
- The lender must have a sign in the place of business that shows the cost of borrowing. It is calculated on a $300 loan due after 14 days. The calculations must show the total that must be paid and the annual interest rate.
- The lender cannot make you pay for any additional services (for example, a cash card, credit card, bank account, or insurance) before giving you a loan.
- For online payday loans, you may cancel a loan within 48 hours after you get or could access the money. There is no penalty for cancelling a payday loan within the cooling-off period, and you do not have to give a reason for cancelling.
- For payday loans received from a storefront location, you may cancel the loan at any time before the end of the next business day. For example, if you get the money on a Friday and the business is closed until Monday, you would have until the end of business on Monday to cancel the loan.
- You can repay the full amount of the loan at any time before it’s due, and a payday lender cannot charge you a fee or penalty for early repayment. If they do charge you a fee, you are entitled to a refund.
- If a payday lender is not licensed, you do not have to pay any interest.
A payday lender cannot:
- require you to buy insurance in order to get a loan
- require security for a payday loan (for example, make you sign an agreement that says they can take your car if you can’t repay the loan)
- require undated or post-dated cheques for more than you would owe on the due date for repayment, including interest and fees
- give you a new payday loan if you already owe money to them
- set the due date for repayment before your next pay day
- charge a penalty or fee if you repay the loan early. You have a right to a refund if you are charged extra for early repayment
- require a wage or other income assignment (for example, make you sign an agreement that says your employer can deduct money from your pay and give it to the lender if you can’t repay the loan)
- grant rollovers. A rollover is a second payday loan to pay out an original payday loan which you can’t pay, or an extension or renewal of your payday loan that adds extra fees or charges, other than interest. Extensions or renewals that only charge interest are allowed.
A payday lender must follow the rules in the Consumer Protection Act and Consumer Creditors’ Conduct Act when trying to collect money from you.
A payday lender cannot:
- Make collect calls to you
- Contact you if you have written telling them to contact your lawyer
- Use documents, notices or letters which are made to look like court forms
- Pretend to represent the police or sheriff
- Threaten you or use abusive or intimidating language
- Harass you or your family, for example, by calling every 15 minutes
- Try to collect the debt on a Sunday or any day before 8:00 am or after 9:00 pm
- Give misleading or false information to anyone about you, including your employer
- Threaten or try to make things difficult for you at work, or at any of your family members’ workplaces
- Ask you for or require you to enter into a wage assignment, or an assignment of any other kind of income. A wage assignment is a deduction from your paycheck, with the money deducted going directly to the lender.
How to find a licensed payday lender in Nova Scotia
The best way to make sure a lender is legit is to check their credentials with Service Nova Scotia. You can also do a free online search at the Registry of Joint Stock Companies. If the company is not listed, they’re not licensed.
Look for the following signs to make sure you’re working with a reputable business:
- The lender displays a Nova Scotia licence number. A licence is required to be displayed in-shop by the lender. You can also contact Service Nova Scotia at 1-800-670-4357 to check if a lender is licensed.
- The lender displays fees. Payday loan lenders must have posters showing the rates they charge. Signs must be posted in both official languages and must be visible to borrowers.
- It doesn’t allow roll-overs or multiple loans. Nova Scotia law doesn’t allow payday lenders to give out multiple loans, or allow borrowers to use a second payday loan to pay off the first one.
- It provides contracts in the language you use to communicate with your lender. Your lender can’t provide a contract in a language you don’t speak or aren’t comfortable conversing in. For example, if you communicate in French, the contract will need to be in French.
- It follows rate and fee regulations. Stay away from lenders who charge more than $19 per $100 borrowed.
How to file a complaint against a lender
You can contact Service Nova Scotia at 1-800-670-4357 to discuss your options for filing a complaint. They will typically conduct an investigation if they believe that a payday loan company has breached Nova Scotia’s consumer protection laws.