Frequently Asked Questions – Payday Loan Information for Consumers
The following are answers to common questions regarding Manitoba’s payday loan legislation. If your question is not answered below or you need further information or assistance please contact:
Consumer Protection Office
302-258 Portage Avenue
Winnipeg, Manitoba R3C 0B6
- Telephone (Winnipeg and surrounding area): 204-945-3800
- Toll-free in Manitoba: 1-800-782-0067
- Fax: (204) 945-0728
- Email: firstname.lastname@example.org
- Website: www.manitoba.ca/cca/cpo/
- The Consumer Protection Act, C.C.S.M, c. 200.(referred to as the ‘Act’)
- The Payday Loans Regulation (Regulation 99/2007) (referred to as the ‘Reg’)
- The Personal Investigations Act, C.C.S.M. c. P34
- The Personal Investigations Regulation (Regulation 392/87R)
- The Business Practices Act, C.C.S.M. c. B120
1. What is a payday loan?
A payday loan is a loan of money of not more than $1500.00 for a term of no longer than 62 days (not including any extension or renewal).
s. 137 and 138(1) Act and s. 2 Reg
2. What is a payday lender?
A payday lender is a licensed business or person who offers, arranges or provides a payday loan.
For example, this can include a business that only offers, arranges or provides a payday loan, or it can be a business that in addition to offering payday loans also offers other goods or services such as pawn broking, income tax rebating, or retail products. Payday loan brokers are also considered to be payday lenders as defined in the Act.
s. 137 Act
3. Does a payday lender need to be licensed to provide payday loans in Manitoba?
Yes. A licence is required for each location where payday loans are offered, arranged, or provided to Manitoba residents. As of October 18th 2010, no payday lender may offer, arrange, or provide payday loans to residents of Manitoba without being licensed.
s. 139(1) (2) Act
4. If a payday lender offers payday loans over the internet, do they need to be licensed?
Yes. Internet lenders must be licensed and they must follow the same rules as payday lenders with store front locations.
9.1(3) Reg 50/2010
5. What is the most I can be charged if I take out a payday loan?
The most you can be charged for a payday loan is 17% of the principal amount of the loan ($17 per $100 borrowed).
s. 147 Act and s. 13.1(1) Reg 50/2010.
If you are charged more than the maximum rate allowed, you have the right to be reimbursed the entire amount of the fee charged.
6. What is the maximum amount I can borrow from a payday lender?
The maximum amount you can borrow from a payday lender depends on your monthly net income for the most recent previous calendar month. Your net pay must be determined using the formula found below. Once your net pay has been calculated, you will be able to borrow up to a maximum of 30% of your calculated net pay.
s. 151.1(1) Act and s. 2.2(1) and s. 2.2(2) Reg 50/2010
In this formula, MNI is your net income for the most recent previous calendar month in which you received income. It is calculated by adding all of the sources of income you received during that month, minus all deductions.
Example: If your previous net pay is determined by the above formula to be $1000, the most you can borrow is $300. If you take out a 12 day payday loan, at the maximum rate of 17%, the chart below shows you the maximum you can be charged:
|Net Pay as determined by net pay formula ($)||Maximum amount you may borrow ($)||Maximum rate you can be charged||How much it will cost you ($)||How much you will have to repay ($)||APR (%) Annual Percentage Rate|
7. If I want to take out a loan after repaying a previous loan, or if I want to extend or renew a payday loan, what is the maximum a payday lender can charge me?
If a payday lender agrees to advance you another payday loan within seven days of repaying a previous payday loan or agrees to extend or renew your existing payday loan,the maximum that the payday lender can charge you is 5% of the principal amount of the loan (or $5 per $100 borrowed).
s. 13.1(2) (3) Reg 50/2010
Example: You take out a loan for $300.00 and it is due on May 19th. For this first loan you are charged 17% of the principal amount of the loan (or $17 per $100 borrowed) and must repay $351.00. On May 18th you ask the lender for an extension to repay this loan. If the lender agrees to extend your loan, the maximum the lender can charge you is $17.55 which is 5% of the principal amount of the loan (or $5 per $100 borrowed). This amount is added to the $351 you already owe to the lender, which means you will now have to repay a total amount of $368.55 ($351 + $17.55) on the new due date of the new loan.
8. What information must I be given when I take out a payday loan?
At the time of making the initial advance under a payday loan or providing the borrower with a cash card or other device that enables the borrower to access funds under a payday loan, the payday lender must give to the borrower a document that:
- states the date and time of day that the initial advance is being made or the card or other device is being given to you,
- states that the loan is a high-cost loan,
- informs you of the right to cancel the loan within 48 hours after receiving the initial advance or the card or other device,
- includes a form that you may use to give written notice that you are cancelling the loan, and
- includes a form of receipt that the lender must use to acknowledge receipt of what was paid or returned upon cancelling the loan.
s. 148(1) Act
The following information must be included in a payday loan agreement:
- the payday lender’s business name, business and mailing address, telephone and fax numbers, email address, and payday lender licence number
- your name, address and telephone number
- how much you are borrowing
- the term of the loan (example: 12 days)
- how much the payday lender is going to advance to you
- how much it will cost you in dollars and cents, and as an annual percentage rate (APR)
- a list of all fees, commissions, charges, penalties, interest and other amounts charged, or to be charged, in relation to the loan
- the date on which payment is due to the payday lender
- if a cash card is issued to you, the following information:
- the terms and conditions for use of the cash card,
- the amount of credit available on the cash card,
- the expiry date, if any, of the cash card,
- a list of the third party service charges that may apply for use of the cash card (example: there may be an additional charge by the business that actually provides the cash card)
- the following statements:
- "If you have any questions or concerns about payday loans, cancellation rights or collection practices, contact the Consumer Protection Office at (204) 945-3800, or toll free at 1-800-782-0067."
- "If you feel you could benefit from debt counselling, contact the Consumer Protection Office at (204) 945-3800, or toll free at 1-800-782-0067 for information.”
- "The Consumer Protection Act provides that the Consumer Protection Office may review and verify the information, including personal information, in this loan agreement for the purposes of ensuring compliance with the Act and the regulations. The Consumer Protection Office may contact you directly to verify the information. It will not use your information for other purposes without your consent or unless permitted to do so by law”.
- information about the cancellation rights under section 149 of the Act, including the procedure for cancelling a payday loan and the time for doing so;
- information about the consequences of the payday lender’s failure to comply with subsections 147(1), 152(1), 153(1), and 154(1) of the Act;
If the payday loan agreement relates to an Internet payday loan, information about how any amounts or consideration described in subsections 147(2), 153(2), 153(2) and 154(2) of the Act will be reimbursed.
s. 148(1) Act, s. 14.1, s. 14.1(1) Reg 50/2010
All the documents and information required to be given to you must be clear and understandable, and must be prominently displayed in the document.
s. 148(2) Act
If a payday lender has not provided you with all the information they are required to, contact the Consumer Protection Office by telephone at (204) 945-3800 or toll-free within Manitoba at 1-800-782-0067, or by e-mail at email@example.com for assistance.
- Make sure you understand all the information in the loan agreement and that you know how much you are borrowing, how much it will cost you, and when you have to repay it.
- You are not required to provide your Social Insurance Number to a payday lender.
- Find out how long your information will be kept and how it will be protected.
- Federal legislation (Personal Information Protection and Electronic Documents Act) regulates the use of your personal information for marketing or other purposes not related to your payday loan.
You should also know that as part of the inspection process, the Consumer Protection Office may review your loan documents.
9. Can I pre-pay a payday loan?
Yes, you can prepay the outstanding balance, at anytime without charge or penalty. Each payday loan agreement must include a statement that notifies you of this right, and that also informs you that you can make partial prepayments without charge or penalty on any scheduled payment date.
s. 18 to 20 and s. 34.3(m) Act
10. Can I cancel a payday loan?
You may cancel a payday loan within 48 hours, excluding Sundays and other holidays, after receiving the first advance or cash card or other device. For example, if you take out a payday loan on Monday at noon you have until Wednesday at noon to cancel.
s. 149(1) Act
You may also cancel a payday loan at any time if the payday lender did not notify you of your right to cancel the loan within 48 hours or if notice of the right to cancel does not meet the requirements of The Consumer Protection Act.
s. 149(2) Act
11. How do I cancel a payday loan?
You must give written notice of the cancellation to the payday lender and repay any money they gave you. You may use the form that is provided on your loan agreement to give the notice.
s. 149(4)(b) Act
The lender must then immediately give you a receipt for the amount you paid or returned to the lender upon cancelling the loan.
s. 149(6) Act
A payday lender cannot charge you any amount for cancelling a payday loan.
s. 149(8) Act
Upon cancellation, the lender must immediately give you a cash refund of any money you paid to them.
s. 149(9) Act
If you need any assistance with respect to the cancellation of a payday loan, contact the Consumer Protection Office by telephone at (204)945-3800 or toll-free within Manitoba at 1-800-782-0067, or by e-mail at firstname.lastname@example.org.
12. Can a payday lender require 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:
- real or personal property
- an interest in real or personal property
- a guarantee
as security for the payment of a payday loan or the performance of an obligation under a payday loan agreement.
For example, they cannot require you to sign over your car as security for the payment of a payday loan.
s. 150 Act
If a payday lender has taken security from you, contact the Consumer Protection Office by telephone at (204)945-3800 or toll-free within Manitoba at 1-800-782-0067, or by e-mail at email@example.com for assistance.
13. Can a payday lender make me sign a document that allows my employer to pay the lender from my wages?
This is called a wage assignment. No payday lender can make you sign a document that allows them to go to your employer to collect the money for your loan.
s. 151(2) Act
If a payday lender has made you sign a wage assignment in relation to a payday loan, contact the Consumer Protection Office by telephone at (204)945-3800 or toll-free within Manitoba at 1-800-782-0067, or by e-mail at firstname.lastname@example.org for assistance.
14. Can a payday lender contact my employer when trying to collect a payday loan?
No person, including a payday lender, can contact your employer or any of your employer’s employees in an effort to collect or attempt to collect payment of a payday loan debt. But a payday lender or a person authorized by you may contact your employer if:
- the borrower has consented to a “personal investigation” as defined in The Personal Investigations Act;
- the contact occurs before the borrower enters into a payday loan agreement; and
- the contact is made only once in respect of a payday loan and for the sole purpose of confirming the borrower’s employment, occupation, length of employment, employment income, or business address.
s 18.3(3) Reg 50/2010
15. There are many payday lenders to choose from. What should I know and consider before deciding to take out a payday loan and before deciding which payday lender to deal with?
- There are alternatives to using payday lenders that may cost you less, such as a loan from a financial institution, a line of credit, an account overdraft from the financial institution you deal with, or a credit card cash advance.
- Know what the payday lender you are considering using charges for their service. Shop around to compare amounts being charged before deciding on where to get a loan.
- Payday loans are high-cost loans. If you feel that debt counselling might help you, contact the Consumer Protection Office by telephone at (204) 945-3800, or toll free at 1-800-782-0067 or by e-mail at email@example.com for information.
If you decide to take out a payday loan, make sure you read the agreement carefully and that you fully understand it. Check to see that it is completed in full and that it contains all the information the payday lender is required to give you before signing.
If you have any questions or concerns about payday loans or a payday lender, please do not hesitate to contact the Consumer Protection Office by telephone at (204)945-3800 or toll-free within Manitoba at 1-800-782-0067, or by e-mail at firstname.lastname@example.org. All calls and emails are confidential by law.