Short-term loans with long-term consequences: An analysis of payday loan policy for British Columbia

Payday lending has grown in popularity among British Columbians. It remains an expensive form of consumer credit, which can lead borrowers into a cycle of debt. Alarmingly, the majority of people who access payday loans are borrowing repeatedly to meet financial shortfalls and not enough has been done to ensure these consumers are protected. This capstone seeks to explore various ways of reducing repeat payday loan use and improve borrower outcomes. The topic is explored by compiling relevant literature, speaking with experts, and examining the policy actions of three distinct jurisdictions. The advantages and disadvantages of four policy options are assessed relative to a set of criteria. The proposed solution is for the government to promote more affordable credit alternatives and stringently regulate licensed payday lenders.