The Government is closing doors on access to a loan.
More closed doors equals less access to money. Facing a cost of living crisis, hardworking Canadians are asking a clear and urgent question: Now What?
Canadians depend on non-prime loans. If these changes go through, that means roughly 1-in-4 Canadians will have no legal or regulated access to credit.
The government is planning to reduce Canadians access to money.
Recently, the Liberal government in Ottawa passed legislation restricting access to credit for Canadians by changing the maximum allowable rate of interest. As a result of this change, those with low credit scores may be denied a loan or access to additional credit. For hardworking Canadians, the timing could not be worse. Amid an affordability crisis, the government's proposed changes will have a wide-ranging, devastating impact.
A Dangerous Vacuum for Criminals to Fill
A study by the Ontario Association of Chiefs of Police, the voice of police leadership in Ontario, and the Canadian Lenders Association, indicates the government’s decision to decrease the maximum allowable rate of interest may lead to an upsurge in illicit financial activities, disproportionately impacting already at-risk Canadians.
The door is
closing on:
Everyday Necessities
Canadian families, including newcomers, rely on non-prime credit for essential expenses such as: groceries, car payments, unexpected bills and consolidating debt.
Safe and trusted alternatives
This government’s changes have the potential to drive Canadians into the hands of undesirable sources of credit such as pawn shops, expensive payday loans, and illegal lenders.
Your financial future
Reducing access to credit not only eliminates a critical source of funds for many families, it also eliminates a key resource that helps Canadians rebuild their credit.
Canada’s financial future
This change has the potential to stamp out an estimated $186 billion of consumer spending from the already struggling Canadian economy.
Canadians deserve better
With inflation at a historic level and the price of living continuing to rise, families across Canada are struggling to make ends meet. In this challenging financial climate:
- Canadians should not be forced to make impossible choices.
- Canadians should not have doors closing on their financial future.
- Canadians should not be forced to ask: Now What?
Demand answers and accountability
By reducing access to credit, the government believes they’re helping. The exact opposite is true. They are hurting hard-working Canadians. The government needs to hear directly from you about why these changes are wrong and how they will impact you and your family.
Closed doors.
Impossible choices.
Canadian families across the country are facing a cost-of-living crisis that is becoming unbearable. In this climate, Canadians are forced to make impossible choices behind CLOSED DOORS. Choices they should not have to make.
Government’s proposed policy to have negative consequences for Canadians
Illustrative Socioeconomic Loss Calculation
A new report by Ernst & Young LLP highlights the real consequences of the federal government’s new interest rate cap and reveals that a reduction to the allowable rate of interest will remove $10.7 billion from the Canadian economy each year.
This drastic change will eliminate nearly 50,000 jobs and cost borrowers up to $4.4 billion in additional interest payments directly to payday lenders and illegal lenders, as a result of being turned away from regulated lenders.
A Dangerous Vacuum for Criminals to Fill
A study by the Ontario Association of Chiefs of Police, the voice of police leadership in Ontario, and the Canadian Lenders Association, indicates the government’s decision to decrease the maximum allowable rate of interest may lead to an upsurge in illicit financial activities, disproportionately impacting already at-risk Canadians.
Rise in illegal predatory lenders: The report shows that with legal, responsible lenders forced out of the marketplace, a void is created for illegal online lenders, operating outside the bounds of Canadian jurisdiction, to fill. Lenders who may exploit and endanger Canadians already at-risk of not making ends meet.
A clear warning: Case studies featured in the report, including examples from Quebec, California, and the UK demonstrate the many negative consequences of interest rate caps, underscoring the potentially disastrous repercussions this policy will have for the broader financial ecosystem, including illegal activity and organized crime.
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No other options.
No way out.
A wide-ranging study conducted by the Centre for Social Justice in the United Kingdom, entitled “Swimming with the Sharks”, shows that 80% of loan shark victims faced initial rejection from legal and licensed credit sources, leading to:
Forced Entry into Illegal Markets: Limited access to legal credit sources creates a void in the financial support system for vulnerable individuals.
Vicious Cycle of Illicit Borrowing: Rejection drives individuals towards illegal money lending due to desperation for immediate funds.
Vulnerable Canadians most at risk.
This study found that the difference between prime borrowers and non-prime borrowers are striking and that the overwhelming majority of non-prime Canadian borrowers were from vulnerable/disadvantaged demographics.
Non-prime Canadians are three times more prone to anxiety-related sleep loss, with nearly half taking extra shifts to tackle debt.
Six-in-ten non-prime Canadians would worry if the government restricted the ability of lenders to offer loans to people with low credit scores.
75% of non-prime and 58% of prime Canadians worry that people who don’t have access to a loan will turn to illegal loan sharks.
Lenders aren’t to blame – The Liberal Government is.
“We want to protect Canadians from unfair marketing schemes and high credit fees.”
“Predatory lenders can take advantage of vulnerable people in our communities, including low-income Canadians, newcomers, and seniors—often by extending very high interest rate loans.”
“Non-prime loans and payday loans are often used as a short-term solution by consumers who face ongoing liquidity issues, perpetuating a cycle of debt.”
“For some Canadians, non-prime loans may perpetuate a cycle of debt.”
Banks and credit unions currently offer low-cost, small-value credit to Canadians with low- or no-credit histories.
Stop the Government from closing doors on Canadians’ financial future.
In the News
Government Interest Rate Cap to Remove up to $10.7 Billion from the Canadian Economy, Cut Off Millions of Canadians from Access to Loans
A new report conducted by Ernst & Young LLP, commissioned by the Canadian Lenders Association (CLA), highlights the severe, far-reaching consequences of the federal government’s new interest rate cap.
Government of Canada’s Interest Cap Risks Criminal Surge
New research paper from the Ontario Association of Chiefs of Police and the Canadian Lenders Association
Federal government to cut off access to loans for millions of Canadians
Changes to drive borrowers to payday and illegal lenders
'Unintended consequences': Interest rate cap means some Canadians could lose access to their credit
Some Canadians who have turned to high-interest loans due to not qualifying for traditional credit could lose access to them as the government prepares to pass new laws targeting predatory lenders, according to the Canadian Lenders Association.
Non-prime lenders warn thousands of borrowers they could be cut off because of new maximum interest rates
‘While on the surface, reducing the maximum allowable interest rate may sound helpful, this change in fact means many borrowers may no longer be able to access a loan in the future,’ letters state.