Have unexpected bills or car repairs caught you off guard? Has your budget been stretched too tight this month? If your current finances won’t see you through to your next payday, a short term payday loan could be your temporary solution.
You can conveniently apply for one of these loans online to receive your funds either by cheque, direct deposit or cash pick-up in a store. The application process typically takes minutes, and you can see your funds quickly if you’re approved – in as little as 15 minutes with some lenders.
Learn whether you’re eligible for a payday loan in our guide below and see how you can apply.
Check the websites of any lenders you’re interested in to confirm they operate in your province of residence.
What exactly is a payday loan?
A payday loan is a short term loan provided in the form of credit that is advanced to you when you need some money. It’s generally paid back at the same time you receive your pay cheque, hence the term “payday loan”. These short term loans can also be referred to as “cash advance loans” and “bad credit loans”. In Canada, loans are regulated under individual laws and restrictions by each province.
How are payday loans different from other types of credit?
Shorter loan term. Payday loans are designed to be short term solutions to your financial problems. You generally won’t find a loan that extends beyond six months, although terms will differ between providers.
Accepts low credit. Payday lenders often do not conduct a credit check, although you may need to provide proof that you can repay the loan – say with proof of a steady income or a bank account in good standing.
Higher rates and fees. Due to their short term nature and accessibility, payday loans across the board come with much higher annual percentage interest rates (APRs) than other forms of credit. Most provinces, with the exception of Newfoundland and Labrador, regulate how high these APRs can be, but some are still very steep when compared with other types of credit. Be sure to take into account the full cost before you apply.
Smaller loan amounts. Again, how much you can borrow may depend on the province you’re in, but you can usually borrow between $100 and $1,500.
Only one loan per borrower at a time is allowed. Borrower can cancel loan up to the end of the following day free of charge. Lender is restricted from accessing the borrower’s bank account or employer. Borrowing limit of 50% of recipient’s take home pay.
$15 per $100
Capped at 23% of the principal amount (including interest and fees). Cap of 30% on a defaulted loan
Borrowing limit of 50% of recipient’s take home pay.
$17 per $100 for a period of two weeks
Any additional loans taken out are limited to a rate of 5% interest.
$15 per $100
Limit of 35% annual interest on all loans
$15 per $100
Borrowers can cancel their loan free of charge for up to 48 hours. Lenders are limited to the number of loans one individual can have. The loan amount is limited to 30% of the recipient’s net pay.
$25 per $100
Prince Edward Island
$25 per $100 borrowed for a period of two weeks
Are these types of loans a bad idea?
Short term cash advances can be a convenient way for you to access credit, but you can also be penalized for not sticking to the repayment requirements. If you default on the cash loan or the loan goes into collections, you’ll receive a negative mark on your credit score that can stay there for up to six years. It’s important to only borrow as much as you’ll be able to repay and to budget your repayments accordingly. If you have any doubts about your ability to meet your repayments, then you may want to consider other credit options.
What features are you looking for?
These loans go by a range of names in Canada including cash advances, payday loans and short term loans. Before you apply, compare a range of loans that might fit your needs.
How to apply for a short term loan
Lenders offering “payday loans” or short term loans differ from institutions and other lenders in their application processing and criteria. You’ll usually be able to apply for these types of loans online and get a response quite quickly. To be approved for a short term loan, you have to meet eligibility criteria and provide documentation.
Be 18 years of age or older.
Valid photo ID.
Open and active bank account.
Steady source of income.
Working phone number.
Note: Meeting the eligibility requirements does not guarantee the approval of your loan.
Valid ID with name and address.
Valid phone number.
Proof of employment with employer’s name, address and phone number.
Pay cycle frequency (ex. Bi-weekly or monthly).
Net and gross income amounts.
Bank account information (chequing account, routing and institution numbers).
How much will a payday loan cost?
Fees for loans differ between provinces.
Depending on the province where you reside, the fees for your loan will differ. For example, in Ontario you’ll pay $15 in fees for every $100 you borrow.
If you borrow $1,000, you’ll pay $150 in fees provided you repay the payments on time. You must pay the full principal amount and fees, which would amount to a total of $1,150.
In British Columbia, you’ll be charged $17 in fees for every $100 you borrow.
So, if you borrow $5,000, you’ll be required to pay $850 in fees. You must pay the full principal amount and fees, which would amount to a total of $5,850.
What other fees are associated with payday loans?
If you’re late or miss a repayment, you may be charged other fees, which can include:
Late payment fees.If you’re late with a repayment and don’t notify your lender beforehand then you’ll likely be charged.
Arrears fees. You’ll be charged a fee if your account goes into arrears.
Collection fees. Any loans which are referred to collections or are defaulted on may incur additional fees.
Collection letter send out. If you receive a collection letter because you’ve failed to make a repayment and the lender cannot contact you then you may be charged a fee.
Statement fee.If you request an account statement from the lender you may be charged a fee.
Am I eligible for a payday loan if…
I receive a pension?
If you’re retired or physically unable to work, you can still access a line of credit or a small personal loan. Some lenders consider your pension as income, so you may still be eligible depending on your financial situation and why you need the loan.
I receive welfare payments?
Some payday lenders and institutions do consider welfare payments as income, so you may be eligible for a loan. It generally depends on how much you earn, what kind of financial situation you’re in and what kind of payments you receive. Contact a lender to find out if you’re eligible.
I have bad credit?
Short term lenders offer flexible eligibility criteria and generally accept those with less-than-perfect credit, but did you know there are lenders who don’t check your credit file at all?
You can consider a payday loan with no credit check.Having bad credit shouldn’t stop you from getting a loan. Find out which companies will lend you money.
Find a personal lender who doesn’t check your credit.Why should what you earn now be affected by what you did in the past? Find a lender who will assess you on your financial situation as it stands today. Keep in mind companies in British Columbia are not allowed to check your finances at all, and in the future, this regulation may make its way across every province in Canada.
How can I improve my short term loan application?
It’s important to do your research and obtain the knowledge to make an informed decision about short term loans. When you’re comparing payday loans and the repayments, some questions you should consider may include:
What’s the purpose of your loan? How quickly do you need access to your funds, and how much do you need to borrow? If you need immediate access, you may want to consider a payday loan provider who guarantees funds within the hour. Some providers only offer short term loans up to $1,000 or less for first-time borrowers, so if you need more then you should consider using another lender.
What are the fees, charges and interest associated with a short term loan? The fees and costs will determine whether or not you can afford the repayments, so it’s important to take these costs into account. Payday loans usually offer set fees and interest rates which make their value easier to compare. You should check the fees you’ll be charged if you miss or are late with a repayment before deciding on a loan. Some lenders will work with you to create a suitable payment plan if you’re not able to make a repayment on time, so contact the lender to find out more information if you find yourself in a tight squeeze financially.
What lender are you applying to? When choosing an instant payday loan you should also think about the lender. Check the lender’s website and make sure it’s a reputable company. You should see how transparent it is with information on fees and interest rates, as well as how easy it is to contact. There are many well known payday loan companies located across Canada.Back to top
Help! There are things I don’t understand about payday loans.
What’s the difference between a payday loan and a credit card cash advance?
A payday loan is a short term loan that is generally paid back at the same time you receive your pay cheque. The funds will likely be automatically withdrawn from your bank account. There are government regulations surrounding the fees charged by loan providers, as well as many other details. You must also be eligible to apply for and be approved to take out a payday loan.
A credit card cash advance is when you take out cash funds using your credit card. The fees are usually around 20% of the withdrawal amount, and you’re only required to pay minimum amounts back on your credit card. This means you are completely in charge of paying the money back as soon as you can, or as soon as you choose to.
What is the interest rate on my payday loan?
This will differ by province and is typically anywhere from $15 to $25 per $100 borrowed. Check out the table above to determine the interest rates on your payday loans.
How does a payday loan affect my credit file?
A payday loan does not affect your credit score unless you fail to make repayments on time. If you don’t make repayments on time, the lender can contact a debt collections agency, who will likely in turn report your accounts to a national credit bureau like Equifax or TransUnion. If you make your repayments on time, your credit score will not be affected.
I have questions about the reason for payday loans, but was too scared to ask.
Payday loans are all about your payday. Your repayments are structured around when you get paid and they’re based on how much income you earn. The motivation for taking out a payday loan is that your payday is too far away and you need the funds sooner. Payday loans bring your payday closer – maybe you have a wedding on the weekend and you’ve forgotten to buy a gift, or your car has broken down and you need it to drive to work. Whatever the case, you can apply and bring your payday closer with a short term loan.
What can I use payday loans for?
Payday loans can be used for a wide range of purposes, but are generally used for unexpected expenses. Common uses for these loans include forgotten bills, car repairs, covering medical expenses or any other sudden events.
What shouldn’t you use a payday loan for?
Payday loans are expensive forms of credit so you shouldn’t use them to fix long-term financial issues. Avoid using them for day-to-day expenses or for a big ticket item such as a car or a house. Also, you shouldn’t use these types of loans if they will put your budget under strain – late fees for payday loans can build up quickly and put you in an ongoing cycle of debt. Here are some examples of when a payday loan is useful, or not:
Could a payday loan help?
$350 for a romantic weekend
$250 for mechanical car repairs
$220 for an overdue phone bill
$575 for Christmas presents
$6,300 for a second hand car
$4000 for a family holiday
$2,000 for a rental downpayment
If you’ve done your research and understand the risks of borrowing and still wish to apply for a credit loan, you can start a comparison of payday loans here.
Frequently Asked Questions
Lenders will have a maximum loan amount and some will have a lower maximum amount for first-time borrowers. The amount you’re able to borrow is based on your ability to repay your loan, which depends on how much you get paid and your financial situation. You can use the payday loan calculator above to help see what your repayments will be on different loan amounts.
If this is your first time taking out a payday loan, it’s important to understand the process before you apply. In Canada, you can apply in store or online for a payday loan, so make sure you have all of your personal documents and financial details handy. You’ll need to compare or inquire about things like minimum income, employment terms, eligibility and whether the lender does a credit check.
Each lender is different so ensure you understand each step of the process before continuing. Make a note of the terms and the repayment amounts and dates and ensure you will have enough to repay your loan. If you need any assistance, the lender will be able to answer any questions you may have. Some lenders have in-person branches while others have online chat, email and phone options.
Payday loans are an expensive form of credit and should only be applied for if you have no other options. Some high-profile lenders have been fined by the government for overcharging customers and others have been criticized for approving loans to people who can’t afford it. This is why so many regulations are now in place in provinces across Canada. These regulations change constantly, so do your research and keep in the know for your specific province.
While these types of loans are heavily regulated by the Government of Canada, it’s important to remember they are expensive and you shouldn’t apply if there are alternatives available to you. Before you apply, see if you may be eligible for another type of credit that may be better suited to your needs. It’s a good idea to calculate costs to see if any of the alternatives are cheaper than a payday loan.
For example, a credit card cash advance is also a convenient way to get cash but can carry a 20%, or sometimes an even greater interest rate. There are also low interest loans you can consider through your bank. If you have no other alternatives and have determined you can afford the loan, then a payday loan is a viable option for you to consider.
Many payday lenders allow you to pay out your loan early without any extra fees associated. You’ll still have to pay the full amount associated with your credit contract. Contact your payday loan credit provider if you need to organize an early payment. Keep in mind some providers may charge extra fees for this service.
The majority of lenders will direct debit your account on the day you get paid, but will not deduct the repayment amount directly from your pay.
Most payday lenders will provide you with a decision on the spot or within 60 seconds. They may need supporting evidence of your wage and employment via bank statements and pay slips. Depending on who you bank with, the funds will be in your account or available for pickup within 24 – 48 hours. This will also depend on whether this is your first loan and if it’s a weekend or public holiday. Many payday loan providers claim to offer same day funding, but this usually depends on which bank you are with. If you’re stuck for cash on a Saturday or Sunday, and you already have a relationship with a lender, it could be worth comparing its offerings.
Payday loans are regulated by the Government of Canada and are designed to be a short term solution to financial problems. There are various restrictions around borrowing more than one loan at once, however this depends on the province where you reside. Check out the table above to find out more information regarding your specific province.
In line with government regulations, you cannot renew or roll over your loan. You must pay it off. You’ll never be charged a renewal fee for any loan you take. If you want to take another loan, you’ll first have to pay off your current loan and then re-apply for a new loan, after assessing your current financial situation.
If you make all of your repayments on time, then a lender may approve you for another loan. Some lenders have benefits for repeat borrowers such as increased borrowing amounts and quicker funding. However, it’s important that you keep in mind these loans are not a long-term solution, and if you frequently need to borrow money, then you may need to consider a longer term borrowing option or a more stable line of credit. It may help to lower your expenditure each month to overcome your cash shortfall.
Payday loan companies use a secure online system to keep data safe. Payday loan applications are generally carried out on a secure online application form to help protect your privacy. These systems use a secure server and SSL encryption to ensure your personal information cannot be stolen.
To verify your income, payday lenders will likely need a snapshot of your account for the past 90 days. These services involved are 100% safe and secure and they only provide a “read-only” view of your account. There are no personal details transmitted and no access to any other information besides your financial history is needed. Some provinces in Canada, like British Columbia, do not allow lenders to access your financial or employment data.
You’ll need to speak to a specific loan provider in order to determine if you’re still able to apply for a short term loan with no snapshot of your bank account. In British Columbia, this will likely not be a problem. In other provinces, you may be able to provide other forms of proof or information.
With the current government regulations, Canadians can have access to extra cash if they meet the eligibility criteria. There are specific companies that offer payday loan services in Canada like Money Mart, Lend Direct, iCash, My Canada Payday and many other smaller, local companies.
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