Finally, Progress on Installment Loans

ACORN International Canada

Toronto           Flying into Toronto, there were many surprises on a clear, cold day.  The first was being reminded that it was baseball’s opening day, even as March Madness is reaching its climax, and we scan the daily NBA standings to see if the Pelicans are safely in the playoffs.  The second surprise was how easy it has now become to take the UP express train from Pearson International airport into the city and Union Station, totally bypassing the constant traffic jams on the expressways into town.  All of that paled though compared to the surprise and excitement of walking into the ACORN office on Danforth and seeing longtime ACORN leader Donna Borden’s picture squarely in the middle of the Toronto Star’s business page celebrating the progress finally won in the announcement of the Canadian federal budget’s partial reduction of the top rates on installment loans, part of a fifteen-year plus campaign ACORN has waged against predatory lending products.

As the Star reported:

In a move hailed as a victory by opponents of so-called predatory lending, Ottawa has pledged to cut the legally permitted cap on interest rates for loans.  The federal government saidt that it intends to cut the maximum allowable annual percentage rate (APR) on loans to 35 per cent, down from the current 47 per cent. It also plans to launch consultations on whether the rate, which is in the Criminal Code, should be lowered even further.  “I was like, ‘Finally, they’re listening to us,’” said Donna Borden, a Toronto-based leader with the anti-poverty group ACORN, who has been calling for the government to change the law for about 15 years after her own experience with a high-interest loan. “We were pushing for 30 per cent and they did 35 per cent,” she said, adding, “(But) it will save a lot of low- and moderate-income people a lot of money.” The federal budget gave the example of someone borrowing $5,000 amortized over two years and said that under the new rate, the borrower would save $775 over the life of that loan. The Liberals promised to lower the criminal rate of interest during the 2021 election campaign and launched a consultation last summer that ACORN said was long overdue.

This is huge, particularly after the fierce lobbying of the so-called greedy, exploitive “alternative” lending companies.

Although the other prong of our anti-predatory lending campaign has targeted payday lenders, whose ceiling rates were not affected by this change, importantly, we see this as a chink in the industry’s armor.  More than a decade ago, ACORN had argued that legally, the Criminal Code did not allow the absurd level of payday lending interest rates.  The federal government at that time punted and pushed the issue back to the individual provinces, where, frankly, we have won some and lost too many.

This more muscular step by the current Liberal government under Justin Trudeau which has, in Borden’s words, “finally heard us,” might open more doors.  We’re hoping with more work and action on our part with others, we might be able to finally get them to listen – and then act – more aggressively against these predatory payday lending operations on the federal level as well.

Organization and persistence once again produces progress and change.  That’s the way it should be, even though it continues to be a pleasant surprise anytime it actually happens.