New High-Cost Credit Regulations Now In Effect

New regulations for high-cost credit lenders operating in the province, came into effect on Saturday.

The new rules include prohibitive practices for high-cost credit lenders, as well as specific guidelines that these lenders are required to follow in order to enter into a credit agreement with a consumer.

A loan with an interest rate at or above the Bank of Canada rate, plus 22 per cent, is considered a high-cost credit product in Newfoundland and Labrador under the new rules.

High-cost credit lending services are distinct from services provided by banks, credit unions and payday lenders, and offer installment loans at high interest rates. The cost of borrowing for a consumer may include additional fees and compounding interest. These financing arrangements may be used for various purposes, including lease-to-own home furnishings, renovations, or vehicle purchases.