60% is the legally allowed maximum interest rate for personal loan in Canada. How did they arrive at this number? I can’t help but wonder. 59% is totally fine but 61% is criminal. How ironic! It might help to look into who are those that have to use high-cost loans.
Today, BNN Bloomberg reported that half of all insolvencies filed in 2022 were by millennials. Young people, of course. Much higher rent and housing price and college tuition compared to the older generations. It feels like life is laughing at their face. Too bad, you should have been born decades earlier! I heard some people said that the young people are not as hard working as the older generations. I am not sure that is the case. I just feel that life is getting harder and harder. Wage or salary is absolutely not keeping up with inflation. Most industries become more and more concentrated. Big businesses grow more and more powerful in controlling the price. It all lead to the hardship for majority of people especially for those more vulnerable such as young people and disadvantaged groups.
The financial expert in the video clip above said the only scenario that high-cost loans make sense is when we are sure that our financial situation is going to improve a lot and fast. For example, we will get a decent-paid job in no time or inherit a lump sum of money soon. Apparently, this situation is very specific and rare.
He said most of us have to explore other options such as cutting expense or get a second job. If all fails, perhaps it is time to talk to a licensed insolvency trustee. Please check out this link from Government of Canada to find out more.
Here is a link by Government of Canada on Payday Loan. I find it quite informative especially the infographic.