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Guelph should be alarmed by short-term loan stores

A recent article in the U.K. Guardian newspaper spoke about the huge increase in high-street businesses selling short-term loans.
The article refers to the London borough of Lewisham as having the highest number per capita in the country of these shops. The ratio is eight per 100,000 inhabitants, compared with one per 100,000 in boroughs such as Kensington. I think there is no debating that these numbers directly relate to relative measurements of poverty and affluence.
I did a quick online search and discovered that there are 11 short-term loan establishments in Guelph, under a variety of names. With a population of 120,000, Guelph’s per capita distribution of these stores outstrips even the highest in the U.K., surely a statistic that no concerned citizen of Guelph can be proud of.
On checking rates and terms of one of the Guelph stores, I discovered that a $300 loan for 14 days will incur a borrowing cost of $63. I believe any right-minded person would view this as a truly outrageous cost of funds.
Put another way, I calculate the annual percentage rate to be 547% (Alberta’s percentage is even higher at 599%). Would we not describe this under any circumstances as usury?
Eliminating such businesses will be as difficult as eradicating poverty itself, but a first step would be that our community recognize and begin to understand the existence and causes of poverty in our ‘affluent’ city.
Peter Gill
Guelph

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