The provincial government says effective June 1, high-cost credit lenders must be licensed to operate in Newfoundland and Labrador.

Newfoundland and Labrador is the first province in Atlantic Canada to enact legislation governing such lenders. The legislation was passed in 2022, with NL joining a growing number of provinces with high-cost credit regimes in place.

The provincial government says high-interest lenders are distinct from banks, credit unions and payday lenders and offer installment loans at high interest rates.

High-interest loans often attract borrowers with poor credit who many not otherwise be able to acquire a loan. That may leave them vulnerable to unscrupulous lenders.

The cost of borrowing may include additional fees and compound interest. The financing arrangements can be used in a variety of ways including lease-to-own home furnishings, renovations or vehicle purchases.

Expensive credit lenders will have to comply with the Consumer Protection and Business Practices Act, along with High-Cost Credit Product Regulations, and High-Cost Credit Product Licensing Regulations which have been published in the Newfoundland and Labrador Gazette.