What is a payday loan?
Need to borrow a small-ish amount of money for a week or up to two months? Payday loans can seem like the answer—find out what’s really involved.
Why are mortgages so expensive in Canada?
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Payday loans are short-term loans offered by private lenders, usually with no credit check. Often these loans are designed to be repaid on the borrower’s next payday, hence their name.
Payday loans are controversial because of their high fees, which translate into much higher interest rates than those charged on credit card balances and most other forms of debt. Payday-loan borrowers in Canada tend to be people with low incomes, limited assets and lack of access to more affordable sources of credit.
Payday loans are regulated in Canada by the provinces and territories. The maximum amount of a payday loan in Canada is $1,500. Terms for payday loans range from seven to 62 days. When due, the loan must be repaid in full or additional interest and penalties apply. A few provinces permit rollovers, allowing borrowers to roll the first amount over into a second loan. In most provinces, you must pay off one payday loan before taking out another. The territories do not have specific rules.
| Province | Maximum charge per $100 loan | Annualized percentage rate for payday loans (based on a two-week loan) |
| Alberta | $15 | 391% |
| British Columbia | $15 | 391% |
| Manitoba | $17 | 443% |
| New Brunswick | $15 | 391% |
| Newfoundland and Labrador | $14 | 365% |
| Nova Scotia | $17 | 443% |
| Ontario | $15 | 391% |
| Prince Edward Island | $15 | 391% |
| Quebec | n/a | 35% |
| Saskatchewan | $17 | 443% |
Example: “While the charges on payday loans appear small, ranging from $14 to $17 per $100 borrowed, they may represent annualized interest rates of 400% to 500%, except in Quebec, where the annualized interest rate is capped at 35%.”
Read more about loans:
- Explainer: How do payday loans work?
Payday loans are short-term, high-interest-rate loans that you generally need to pay back within the typical two-week payday cycle. Are these lenders filling a need, or are they preying on Canadians who aren’t able to borrow money from conventional sources? - Can debt collectors discuss your debt with your family members?
Avoiding a call from a debt collector? Did a parent or spouse answer? Find out what could be said—and not said—to someone other than you about your debt. - How much credit card debt does the average Canadian have?
How does your credit card debt stack up against the average Canadian’s? Find out as we dive into how we handle what we owe. - What is a mortgage?
A mortgage is a loan that can help you buy the perfect home. Here’s how they work, how to apply for one and what you need to get approved.
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