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Payday loan interest rates

Payday loans come with notoriously high interest rates.

Payday loans are small loans with very short repayment terms and exorbitant borrowing fees. Depending on your province or territory, you could pay between $15 and $25 for every $100 borrowed.

What are the payday loan interest rates in Canada?

The annual percentage rates (APR) for payday loans in Canada are much higher compared to other types of loans. APR is a loan’s interest rate and fees expressed as an annual cost. It gives you a truer view of the cost of a loan, and it helps you compare the cost of different types of loans.

Payday loan APRs typically range from about 390% to 780%, with many payday loans sitting around the 540% APR mark. As an example, let’s take a $900 payday loan in Ontario with a borrowing fee of $135 ($15 charged for every $100 borrowed). If you have a repayment term of 14 days, your APR would come out to 391.07%.

How do payday loan rates differ from other financial products?

Payday loans have higher APRs compared to credit card cash advances and personal loans for bad credit. Credit card cash advances typically have a 23% APR plus a fee, while bad credit personal loans tend to max out at 47% APR.

Let’s go back to the $900 example. Here’s how the costs would compare:

Payday loan ($15 for every $100 borrowed)Credit card cash advance (23% APR + 5% fee)Personal loan (46.96% APR)
Loan amount$900$900$900
Loan term21 days21 days6 months
Borrowing cost$135$11.91 + $45 = $56.91$171.20 monthly payment, $127.21 in total interest

The credit card cash advance is the cheapest option. The costs of the bad credit personal loan and payday loan are almost the same in dollar terms. The key difference is the loan term; the personal loan has a longer loan term of 6 months, allowing you to spread out your payments.

Can a payday loan interest rate change depending on my personal situation?

Unlike other types of loans, the borrowing fee of a payday loan is the same for borrowers and does not depend on personal factors, such as credit score and income. Lenders in the payday loan space tend to charge the maximum they’re legally allowed to, no matter your financial situation.

The payday loan’s APR, however, can change depending on your loan term. Let’s go back to the $900 loan example with a borrowing fee of $135:

Loan amountBorrowing feeLoan termAPR
$900$13514 days391.07%
$900$13521 days260.71%
$900$13542 days130.36%
$900$13562 days88.31%

Even with the maximum loan term allowed for payday loans, the APR is still very high.

What other fees come with payday loans?

If you want to take out a payday loan, a lender cannot charge you any fees besides the borrowing fee. However, if you don’t pay back your loan on time, you will be charged fees like NSF fees and late payment fees.

What to consider with payday loans

Before getting a payday loan, examine your financial situation and decide if a payday loan is truly the best option for your financial needs. If you don’t think you can make the repayments, don’t take a loan out in the first place. Explore other options like a credit card cash advance, an installment loan or borrowing from friends or family. Payday loans should be a last resort.

If you decide that a payday loan is the right option for you, be absolutely sure that you can afford to make the repayments on time. Also, check that you’ll have enough income left to pay for other expenses once you repay your payday loan. Otherwise, you may find the need to apply for another loan.

⚠️ Warning: Be cautious with payday loans
High-cost payday loans are unsustainable for borrowing over a continued period of time and are expensive as a means of longer-term borrowing. View payday costs and regulations by province here. If you're experiencing financial hardship call Credit Counselling Canada for free financial counselling (Monday-Friday 8:00am-5:00pm at +1 866-398-5999). You may also want to consider payday loan alternatives.

Compare payday loans

1 - 3 of 3
Name Product Loan Amount Loan Term Interest Rate Turnaround Time Serviced Provinces Offer Table description
iCash Payday Loan
$100 - $1,500
7 - 62 days
Varies by province
As little as 2 minutes with INTERAC e-Transfer®
Get up to 20% in cash back once your payday loan is fully repaid. Conditions apply.
Same day cash up to $1,500 for car payments, rent, mortgage, home & appliance repair, and more. 24/7 instant approval and e-Transfer funding. Income of at least $800/month required.
Money Mart Payday Loan
$120 - $1,500
1 - 62 days
Varies by province
As little as 1 hour after getting approved
To be eligible, you’ll need to be at least 18 years of age with a steady source of income and a chequing account. No credit check required.
Cash Money Payday Loan
$100 - $1,500
5 - 40 days
Varies by province
As little as 15 minutes with INTERAC e-Transfer®
Apply for your first $300 payday loan at a $20 cost (excludes SK applicants).
Instant decision and e-Transfer funding. Income of at least $1,000/month required.
Maximum borrowing costs of payday loans per province
Always refer to your contract for exact repayment amounts and costs.
Province Max. cost of borrowing a $100 payday loan Cooling off period to cancel loan Max. penalty for returned cheque or pre-authorized debit
Alberta $15 2 business days $25
British Columbia $15 2 business days $20
Manitoba $17 48 hours excluding Sundays and holidays $20
New Brunswick $15 48 hours excluding Sundays and holidays $20
Newfoundland and Labrador $14 2 business days $20
Nova Scotia $17 Next business day (2 days for online loans) $40 (default penalty)
Ontario $15 2 business days $25
Prince Edward Island $15 2 business days N/A
Quebec Limit of 35% AIR N/A N/A
Saskatchewan $17 Next business day $25

How to compare payday loans

How to apply for a payday loan

If you’re interested in applying for a payday loan, follow these steps:

  1. Research and compare your options. Take the time to compare the different lenders and the loans they offer.
  2. Meet the eligibility requirements. To be eligible for a loan, you must be at least 18 years old or the age of majority in your province or territory, have proof of an income and be a Canadian citizen or permanent resident. You may also need to have a valid bank account.
  3. Apply. Once you decide on a lender, you can apply on their website or visit a branch in person if the lender has physical locations.

Are payday loans available in my province or territory?

Payday loans are available in all provinces and territories across Canada. You should be aware that payday loans are regulated by individual provinces, which means costs and fees can vary. Ensure that any lender you choose abides by the laws of the place you live.

The Yukon, Nunavut and the Northwest Territories do not have legislation regulating payday loans at the territorial level. Payday loans are regulated in these territories at the federal level only.

Find out how much lenders can charge across Canada

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