Payday loan regulations in Canada vary between provinces and territories. The rules that determine how much lenders can charge and how much you can borrow depend on where you live. Whether you can take out more than one payday loan at a time also depends on where you live.
As a borrower, it’s important for you to be aware of the regulations in your province or territory so you can make sure you’re getting a fair deal. Read on to learn about the legislation that applies to each province.
How are payday loans regulated in Canada?
Payday loans in Canada are regulated at the provincial level. As a result, factors such as how much you can borrow, how long you have to repay the loan and how much it will cost vary around the country.
The Criminal Code of Canada sets the maximum rate of annual interest for most lending products at 60%. However, as per section 347.1 of the code, payday loans are exempt from this rule in the following situations:
- They’re for amounts of $1,500 or less and loan terms of 62 days or less
- They’re offered by a licensed or specially authorized lender
- The province has consumer protection laws in place to protect payday loan borrowers
Check out the table below to find out what regulations apply in your province.
Different rules apply in Quebec and the territories, and you can find details of payday loan regulations in these locations further down the page.
Payday loan regulations in Canada
|Province||Maximum cost per $100 borrowed||Maximum loan amount||Maximum loan term||Maximum fee for a returned cheque or pre-authorized debit||Additional information|
|Ontario||$15||$1,500 (up to 50% of your net income)||62 days||N/A||There’s a cooling-off period of two business days to cancel the loan. If you can’t repay your loan on time, lenders can charge a maximum interest rate of 2.5% per month (non-compounding) on the outstanding amount. Rollover loans are not allowed.|
|British Columbia||$15||$1,500 (up to 50% of your paycheque)||62 days||$20||There’s a cooling-off period of two business days to cancel the loan. If you can’t repay your loan on time, the lender can charge additional interest at 30% per annum on the outstanding loan amount. Rollover loans are not allowed.|
|Alberta||$15||$1,500||42 - 62 days||$25||There’s a cooling-off period of two business days to cancel the loan. Rollover loans are not allowed.|
|Saskatchewan||$17||$1,500 (up to 50% of your take-home pay)||62 days||$25||There’s a cooling-off period of the next business day to cancel the loan. If you default on a loan, the lender can charge interest on the outstanding amount at a maximum rate of 30% per annum. Rollover loans are not allowed.|
|Manitoba||$17||$1,500 (up to 30% of your net pay)||62 days||$20||There’s a cooling-off period of 48 hours (excluding Sundays and public holidays) to cancel the loan.|
|Newfoundland and Labrador||$14||$1,500 (up to 50% of your net income)||62 days||$20||There’s a cooling-off period of two business days to cancel the loan. Rollover loans are not allowed.|
|New Brunswick||$15||$1,500 (up to 30% of your net pay)||62 days||$20||There’s a cooling-off period of 48 hours (excluding Sundays and public holidays) to cancel the loan. Rollover loans are not allowed.|
|Nova Scotia||$17||$1,500||62 days||$40||There’s a cooling-off period of the next business day to cancel the loan (two days for online payday loans). Lenders can charge you up to 30% annual interest if you fail to repay your loan on time.|
|Prince Edward Island||$15||$1,500||62 days||N/A||There’s a cooling-off period of two business days to cancel the loan. Rollover loans are not allowed without proof that at least seven days have passed since you paid off the full balance on the initial loan.|
How much will a payday loan cost?
A maximum cost of $14 to $17 for every $100 borrowed may not seem like all that much, but it is. Thanks to their short loan terms, payday loans have extremely high annual percentage rates (APRs) and are a very expensive way to borrow money. Let’s take a look at how much it would cost to pay back a $500 loan based on the regulations where you live.
|Province||Maximum cost per $100 borrowed||Loan amount||Loan term||Total cost||APR|
|Newfoundland and Labrador||$14||$500||14 days||$570||365%|
|Alberta, British Columbia, New Brunswick, Prince Edward Island and Ontario||$15||$500||14 days||$575||391%|
|Manitoba, Saskatchewan and Nova Scotia||$17||$500||14 days||$585||443%|
Payday loan regulations in Quebec
Payday lenders in Quebec are governed by much stricter regulations than elsewhere in the country. The maximum annual interest rate on all loans in Quebec is 35% – a far cry from the 300%-plus APRs commonly found on payday loans in other provinces – which makes payday loans an unprofitable prospect for lenders. As a result, these loans are far less common in Quebec than in other provinces.
Borrowers also have a cooling-off period of 10 days if they wish to cancel a loan. Find out more in our guide to payday loans in Quebec.
Payday loan regulations in the Northwest Territories, Nunavut and Yukon
In the three territories, federal regulations outline the laws payday lenders must follow. A payday loan in the Northwest Territories, Nunavut and Yukon can cost as much as $60 in fees per $100 borrowed, but $25 for every $100 borrowed is more common from the lenders we’ve seen operating there.
Loans of up to $1,500 are available, with terms ranging from 1–2 weeks up to a maximum of 62 days. Rollover loans are also permitted.
Do payday lenders need to be licensed?
Yes. Payday lenders typically need to be licensed in the province(s) in which they operate. To make sure you’re dealing with a legitimate lender, it’s essential to check whether they hold a valid payday lending licence in your province.
To find out whether a lender is licensed, contact your local consumer affairs office – many offer searchable online databases where you can find lender licensing details. Regulations also commonly stipulate that the lender must prominently display their licence, both in-store as well as on their website.
Payday loan regulations and debt collection
Payday loan laws in many provinces also outline what a lender is allowed to do when trying to collect loan payments from borrowers. These regulations determine when and how often a lender can contact you and how they must act when doing so. They also outline whether the lender can sue you for any outstanding debt or garnish your wages if you default on the loan.
The following provinces have payday loan debt collection regulations in place:
- British Columbia
- New Brunswick
- Nova Scotia
For example, under Alberta’s regulations, a payday lender is allowed to contact you between 7am and 10pm. They can also contact your employer to confirm your employment status and contact a spouse, relative, friend or neighbour to confirm your residential address.
However, the lender must not do the following:
- Make any unauthorized withdrawals from your bank account
- Use threatening, profane, intimidating or forceful language
- Discuss your debt with anyone other than you (except a guarantor of the debt or someone you have nominated as your representative)
- Call you, your family members or your employer so often that it represents harassment
There are other prohibited collection practices to be aware of, so read up on payday loan rights where you live.
Other features of payday loan regulations
While payday loan regulations vary between provinces, they also outline several other rules payday lenders must follow. These include the following:
- Information lenders must provide to borrowers. Provincial regulations stipulate that a lender must provide you with clear information about a loan before you sign a loan contract. The info they must provide includes the loan amount and term, the repayment date, all fees and charges that apply and the total cost of the loan.
- Restrictions on wage assignment. In many provinces, a lender is not allowed to request a wage assignment or automatic deduction from your next pay to repay your loan.
- Signage requirements. Regardless of whether they offer loans in-store or online, payday lenders in many provinces must display clear signage that shows the rates and fees of payday loans.
How to find out about payday loan regulations where you live
If you want to know more about the payday loan laws in your province or territory, or if you want to make a complaint about a lender, contact your local consumer protection office.
Toll-free phone: 1‑877‑427‑4088
Consumer Protection BC
Toll-free phone: 1‑888‑564‑9963
Consumer Protection Office
Toll-free phone: 1‑800‑782‑0067
Financial and Consumer Services Commission
Toll-free phone: 1‑866‑933‑2222
Newfoundland and Labrador
Digital Government and Service NL
Toll-free phone: 1‑877‑968‑2600
Phone: 867‑767‑9161 ext 21022
Service Nova Scotia and Internal Services
Toll-free phone: 1‑800‑670‑4357
Toll-free phone: 1‑866‑223‑8139
Consumer Protection Ontario
Toll-free phone: 1‑800‑889‑9768
Prince Edward Island
Toll-free phone: 1‑800‑658‑1799
Office de la protection du consommateur
Toll-free phone: 1‑888‑672‑2556
Consumer Protection Division
Financial and Consumer Affairs Authority of Saskatchewan
Toll-free phone: 1‑877‑880‑5550
Toll-free phone: 1‑800‑661‑0408 ext 5111
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