Let’s put an end to the predatory interest rates

Right here in Canada, unscrupulous financial institutions and lenders manage to sidestep the Criminal Code by charging up to 600% interest on loans taken out by the less fortunate in society.

You read that right 600% or 10 times the current rate of 60% which is labeled as “criminal”.

It was NDP MP Peter Julian of New Westminster-Burnaby who denounced these abusive loans on December 14 during the first reading of Bill C-213: “A Criminal Code Amendment Bill (‘criminal interest’ rate).

Trudeau-Freeland decline

So far, what has Justin Trudeau’s administration done to counteract these financial abuses?

Against all odds, he found a way to roll back the steps he took in 2021 to counter abusive interest rates.

Justin Trudeau and his Treasury Secretary Chrystia Freeland say not a word in their 2022 budget about “borrowing on abusive terms” and what they describe as “criminal” lowering of interest rates.

However…

In the April 2021 primary budget, Justin Trudeau’s administration pledged to crack down on predatory lending.

“To combat lending on abusive terms, according to Ms Freeland’s 2021 Budget, the Canadian government will launch a consultation on reducing crime rates provided for in Canada’s Penal Code, which will apply, among other things, to installment loans offered by payday loan companies. »

In the end, the “consultation” did not take place.

And we’re still struggling with a “crime rate” officially at 60%. In fact, however, as MP Julian denounced, this rate can be significantly exceeded, with several loopholes, and with total impunity for financial abusers.

Invoice C-213

What is NDP MP Peter Julian doing with Bill C-213?

“This legislation,” he told his peers in the House of Commons, “would close the loopholes that allow financial institutions and payday lenders to charge interest rates of 500% or 600% and would halve the criminal rate currently allowed under the Criminal Code.”

“I would like, he added, to give just one example out of many that exist. A resident of my ranch I’ll call Lisa paid $13,000 in interest for a couple of years. She was struggling to pay for her groceries and rent on a $700 emergency loan, and at all times was unable to repay a single dollar of principal. »

A crime rate of 30%?

Ultimately, Bill C-213 aims to significantly lower interest rates, which the Criminal Code describes as “criminal”. Instead of 60%, the interest rate would become “criminal” as soon as it exceeded the Bank of Canada’s base rate by 30%.

If Bill C-213 were in force, it would mean that today the “criminal interest rate” would be estimated at 32.5% (30% + 2.5% of the base rate). That’s still high even compared to the 20-22% interest charged by credit card issuers.

Incidentally, many consumers are currently being siphoned off with interest rates between 34% and 45% and even more so with associated fees.

It is important to note that many dealerships in Canada (used car, furniture, hardware stores, etc.) have agreements with financial institutions that may charge consumers abusive fees when purchasing on credit.

Most importantly, the new criminal interest rate would include: “All charges of all kinds, including premiums (overdraft interest), commissions, insurance charges, penalties and indemnities, paid or payable by or at the expense of anyone on their behalf, in consideration for the capital lent or to be lent. »

So defined, it would prevent savvy lenders and financial institutions from using various loopholes to squeeze borrowers like lemons.

It’s never too late to do well. I therefore invite Justin Trudeau and his Treasury Secretary Chrystia Freeland to endorse the most sacred passage of Bill C-213.

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