The city of Hamilton has become the first municipality in the province to limit the number of payday loan establishments. Councillors voted to allow only one business per ward, but the existing shops will remain open.
“There’s certainly upwards of 30. Some are more official than others.” Tom Copper, Hamilton roundtable for poverty reduction. Those 30 registered companies will be grandfathered in to this new bylaw.
Copper says 16,000 Hamiltonians go through the doors of payday loan stores each year. Many of them are on the streets of wards 2 and 3.
“The payday loans set up shop on the fringes of low income neighbourhoods and appeal to the people with no where else to turn.”
Doug Hoyes, an insolvency trustee says a third of his clients are trying to pay back payday loans. He says compared to other areas in the province, this is a serious problem in Hamilton.
“If you borrow every 2 weeks it’s 390%, that’s the annual interest rate you are paying and I don’t think people fully appreciate that.”
But the President and CEO representing some of the biggest loan stores on the market says there’s another side to the story.
“What will happen to people when they have no where else to go? When they need to pay their rent or fix their car? If the payday loan industry is cut in half in Hamilton what options are left for them.?” Tony Irwin, Canadian consumer finance association.
Irwin, who speaks for stores like Money Mart say they provide loans when the banks won’t. But activists say they exploit the poor and for every new customer, 15 are repeat customers and that’s where they make their money.
City council will need to ratify the decision to limit these businesses later this month.