A pay day loan study has shown that lenders are not making vast amounts of money out of their consumers but are incurring a number of costs.

Conducted by Deloitte & Touche, the survey shows that around a quarter of the cost of providing a pay day loan in British Columbia goes on expenses

These include operating costs, the price of capital and the cost of absorbing bad debt.

The survey comes after legislation was passed that gives the authorities in British Columbia the power to regulate pay day lenders by setting an upper limit on fees and rates.

Canadian Payday Loan Association president Stan Keyes said: "Setting the right rate cap will further protect consumers while ensuring access to credit where needed through a viable industry."

Pay day loans are particularly useful for those who are in debt and at times of sudden financial crisis.

They can be used in a number of ways, such as paying for healthcare, according to Best Syndication.

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