After nine years in Scarborough Village, Maranatha Auguste knows a lot of people who take payday loans, and she considers them “the best business ever.”
“It’s an addiction,” says Auguste. “There’s people that go there every week.”
Friends and acquaintances returning to the cash shops – the bright red, yellow, or green storefronts now so common in Weston, Downsview and other parts of Toronto – never get to use their own money.
“By the time they get paid, they don’t have no money left,” says Auguste.
The province on Jan. 1 forced payday lenders to cut the maximum $21 interest they charged for a short-term $100-loan down to $18.
But imagine that interest piling up if you can’t pay the entire loan back, plus overdraft charges. That’s what payday lenders want.
A personal support worker and mother of two, Auguste works whatever hours an agency gives her. For now, that’s two part-time jobs in a North York retirement home.
A few years ago, she took a payday loan. “I was not making enough hours. I couldn’t meet the bills.”
Auguste borrowed $300. The lender charged her $45 in fees, and she still had to pay back $360, but did.
Auguste now prefers to use her credit card when short of funds, but says some people don’t even have that.
The payday industry describes two customer personalities, the ALICE, or Asset Limited, Income Constrained, and Employed - in other words, the working poor - and the ARTI, Asset Rich, Temporarily Illiquid, who use the loans as “interim financing” for unexpected expenses.
Auguste is an ALICE, one of many.
Her $11.25 minimum wage comes to $1,500 a month after taxes. Her husband, also working for an agency, gets $11.25 hourly at a food lab. “Our rent is already $1,200. What can we do to pay the rest of the (bills)?” she asks.
For people offering you work, it’s a game, says Auguste. “While you work like a horse or a donkey,” she adds, they’re happy to give you $11.25, “because the government says that’s what your work is worth.”
Payday lenders are just a symptom of something larger.