Report outlines options to regulate pay day loan lenders

© Can Stock Photo / shaunwilkinson

Should the City of Windsor regulate payday loan businesses?

They fill a gap in the finance sector by offering short-term loans but at a high rate of interest. Most of the clientele is low-income, unable to get a bank loan or get help from friends or family.

There are 17 in the city now, with the greatest concentration downtown with five separate establishments.

While they may help that live paycheque to paycheque to get through a hard patch, research also indicates they can lead to a cycle of worsening finances. A Government of Canada survey of payday loan users said 74 per cent considered it the best option available to them.

Some municipalities in Ontario regulate them. Kingston and Hamilton restrict payday loaners to one per ward to reduce their numbers in low-income neighbourhoods. Branford allows just ten and restricts how close they can locate near group correctional homes, group homes, shelters, medical clinics, schools, and gaming establishments.

Should councillors opt to regulate payday loaners in the city, a report before council offers three options.

Like Brantford, Windsor could limit how many can operate in the city, while grandfathering in existing businesses. It could also restrict the number within each ward.

A targetted approach would limit their location near casinos, addiction and treatment centres and areas where vulnerable populations live. It could also offer a hybrid of the two.

The city could also license payday loaners.

The report makes no recommendations and was sparked by a question in 2019 from Ward 3 councillor Rino Bortolin.