Newfoundland and Labrador is now the first Atlantic province to have a regulatory regime specific to high-cost credit lenders.
Provincial regulations giving greater protection to consumers who seek out loans from lenders at high rates of interest came into effect June 1.
Loans with interest rates at or above the Bank of Canada’s rate, plus 22 per cent, are considered high-cost—and the new threshold is the lowest in the country aside from Quebec.
High-cost lending services are different from those provided by banks, credit unions and payday lenders. They usually offer installment loans at high interest rates for things like lease-to-own furniture and appliances, renovations and car loans.
The cost of borrowing from one of those companies may also include extra fees and compound interest.
Payday loans meanwhile, have been regulated in the province since 2019. The maximum cost of borrowing for payday loans in NL is $14 per $100—the lowest in the country.