Manitoba will enforce varying payday loan rates based on not only income, but the source of that income.

The Manitoba Public Utilities Board has set maximum payday loan rates on a sliding scale based on the customer's net pay and source of income. The Board gave no guidance on how lenders will follow the convoluted system. Requirements include:

Cost of Credit
The maximum cost of credit that may be charged, required or accepted in respect of a payday loan, excepting for loans to persons on employment insurance or social assistance, or for loans in excess of 30% of the applicant/borrower’s expected next pay net of deductions, will be:

a) 17% of value received to $500; plus
b) 15% of value received from $501 to $1,000; and
c) 6% of value received between $1,000 and $1,500.

For payday loans to persons on employment insurance or social assistance, or for loans in excess of 30% of the applicant/borrower’s expected next pay net of deductions, the maximum cost of credit shall be 6% of value received to $1,500.00.

If a payday loan is fully repaid more than five (5) days prior to the loan’s due date, but after the 48-hour cooling-off period, the cost of credit shall be retrospectively set at the original cost of credit, less $3.00 for each day over five (5) days the loan is repaid early, with a minimum cost of credit of $10.00. In determining adherence to this maximum, all charges and interest of any and all kinds, however determined or levied, are to be included in the calculation.

In its next review of maximum charges, which is to take place no later than three years from the date of the proclamation of the regulation setting maximum charges, the Board intends to review the thresholds at which these amounts are now established, to consider inflation.

Extension, Renewal or Replacement
The maximum amount that may be charged, required or accepted in respect of an extension, renewal or replacement loan is 5% of the balance extended, renewed or replaced.

Only one charge is allowed for each extension, renewal or replacement event, notwithstanding the number or frequency of times that extension, renewal or replacement occurs. No separate interest or any other charge may be levied related to the extension, renewal or replacement of a payday loan.

Default
The maximum amount that may be charged, required or accepted in the case of default will be $20, and that for only one time, plus a maximum rate of interest of 2.5% per month not to be compounded, unless an extension, renewal or replacement loan is provided. In the latter case, no default charge may be applied, required or accepted.

Debit/ Credit Card Charges
With respect to charges for or related to debit and credit cards where the borrower does not have the option of receiving cash, the aggregate amount of any charges that may be levied on or accepted by a borrower, including the estimated or known charge by a third party based on the assumption of one transaction, is to be added to the cost of credit and, if the sum exceeds the maximum cost of credit as set out above, then the excess is to be deducted from the cost of credit.

Dollar Financial Corp acknowledged the new rates and fee structure. "We believe the newly proposed Manitoba legislation provides new growth opportunities for Money Mart in Canada, and we are comfortable that Money Mart will continue to operate efficiently under the new Manitoba model, while continuing to provide superior customer service," said Jeff Weiss, Chairman and CEO of Dollar Financial.

Dollar Financial operates 1,442 stores, including 1,088 company-operated financial services stores and 354 franchised and agent locations in 32 states, the District of Columbia, throughout Canada and in the United Kingdom.