This bill proposes major changes to the Criminal Code regarding interest rates in lending agreements. It aims to redefine what constitutes a "criminal rate" by including additional fees like insurance in interest calculations.
Vulnerable populations, such as low-income individuals and those with poor credit histories, may be affected most. Supporters believe this will protect them from predatory lending practices. However, traditional lenders and payday loan services may adjust their offerings or limit access to loans as a result of tighter regulations.
The bill could lead to increased compliance costs for lenders who must adjust their business practices to meet the new guidelines. For consumers, there could be fewer opportunities for obtaining credit, which may lead to greater reliance on alternative financial services that could still charge high rates. The overall impact on prices for borrowings—such as loan fees and interest—remains uncertain, and some may face increased costs if lenders are forced to raise rates to maintain profitability.
Supporters argue that the bill will reduce predatory lending by establishing clearer guidelines, thereby protecting vulnerable consumers from unfair practices. They believe that this will create a more transparent lending environment and prevent individuals from falling into lasting debt due to exploitative interest rates.
Critics contend that the bill could reduce access to credit, particularly for those who rely on payday loans or high-risk lending options. They worry that higher compliance costs for lenders may push them out of the market, leading to fewer borrowing options for consumers. Furthermore, the removal of specific provisions regarding payday loans could create uncertainty, potentially leading to legal issues for both lenders and consumers.