Payday loans in Newfoundland and Labrador
You'll pay a maximum of $21 in fees for every $100 you borrow.
If you find yourself in need of some fast cash, you might consider taking out a payday loan. But while they’re quick and convenient to get, they’re expensive and risky forms of debt.
We’ve designed this guide to help you navigate the ins and outs of cash advance payday loans in Newfoundland and Labrador, so that you have as much information as possible to make an informed decision before borrowing money.
Can I get a payday loan in Newfoundland and Labrador?
Yes, payday loans are legal in Newfoundland and Labrador. Each province has its own rules that govern costs and lending restrictions. In Newfoundland and Labrador, the Consumer Protection and Business Practices Act helps protect those who take out payday loans.
Here are the rules surrounding payday loans in Newfoundland and Labrador:
- You can’t be charged more than $21 in fees for every $100 borrowed.
- A lender can charge additional fees if you don’t pay your loan by the due date.
- The maximum amount you can borrow is $1,500.
- You can’t borrow more than 50% of your net income.
- Loans usually must be paid off within 1 – 2 weeks.
- The maximum term for this type of loan is 62 days.
- You can’t get a new loan until you pay off your first one.
- Lenders cannot ask you to sign a form that transfers your wages directly to them.
- Roll-over loans are not allowed. This means you can’t roll over what you owe into a second payday loan.
- Should you change your mind and want to cancel your payday loan, you have 48 hours to do so without facing a penalty. You also don’t have to provide a reason for cancelling.
- Lenders cannot offer or sell you any products or services in connection with the payday loan.
⚠️ Warning: be cautious with short-term loans
If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call the Credit Counselling Canada on 1800 007 007. It is open from 8:00am to 5pm, Monday to Friday. When comparing short term loans, ensure you take into consideration any fees, charges and rates you may be charged.
Alternatives to short-term loans
Consider these alternatives before applying for a payday loan:
- Use online Government resources. The Financial Consumer Agency of Canada website demonstrates how small amount loans work – and suggests alternative options that may help you.
- Payment plans. Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan or receive an extension on your due date if you’re behind on payments.
- Contact your creditors. Speak with creditors about extending the due date of your payment, or working out a new payment plan that works for both of you. Seek personal loans elsewhere. Consider a small personal loan from a bank or a credit union. You may qualify for a loan with much lower interest rates than those offered by payday loan companies.
- Pay with credit card. Consider paying with your credit card to cover your emergency bills or payments. This is not a long term solution, as you’ll need to pay off the balance as soon as possible, but it’s an alternative to a short term loan with high – and immediate – interest rates.
Fast facts about payday loans in Newfoundland and Labrador
- Maximum loan amount: $1,500
- Minimum loan term: 1 – 2 weeks
- Maximum loan term: 62 days
- Maximum interest: $21 for every $100 that you borrow
What fees will I have to pay?
Although Newfoundland and Labrador has laws in place to protect consumers from predatory lending, you’ll still need to pay a maximum of $21 for every $100 that you borrow. You have 48 hours to cancel a contract – known as the “cooling-off period” – for a payday loan without having to pay a fee. Payday lenders can’t give you a loan for more than 50% of your paycheque and the loan agreement must list all of the charges, terms and conditions of the loan.
Example: If your previous paycheque is $1,000, the most you can borrow is $500. If you take out a 14 day payday loan, the chart below shows you the maximum you can be charged.
|Paycheque||Max loan||Max charge||Cost of interest||Repayment Amount||APR (%)|
|$1,000||$500||$21 per $100||$105||$605||547.50%|
The table below shows the fees you will pay for a payday loan versus a credit card.
|Loan Amount (over 2 weeks)||Payday loan fee||Credit card fee (23%)||Line of Credit (7% + $5 fee)|
Can I get a no credit check loan in Newfoundland and Labrador?
Most lenders won’t do a credit check when issuing a payday loan. Instead, they’ll be more interested in you having:
- An active chequing account
- A permanent address (and proof of it)
- Three months of continuous employment (and proof of it)
This lenient criteria can be easy to meet – with the added bonus of not having to prove you’re a responsible borrower. However, some lenders who don’t do credit checks might be more likely to be predatory and illegitimate. This is why it’s important to do your research and use a reputable lender – whether they do a credit check or not.
What should I keep in mind before applying?
Before applying for a payday loan, compare other financing options like personal loans, lines of credit or borrowing money from friends or family. Payday loans are notoriously expensive and can throw borrowers into a cycle of debt.
If you do decide to take out a payday loan, it’s important to borrow only as much as you’ll be able to repay and to budget your repayments accordingly. If you default on your loan or the loan goes into collections, you’ll receive a negative mark on your credit report that can stay there for up to six years. Make sure to budget for the amount of money you plan to take out, and use a licensed lender.
How can I tell if a lender in Newfoundland and Labrador is legit?
Lenders in the Newfoundland and Labrador have very new legally-mandated obligations to protect customers, which means that it may be easier for them take advantage of people going through a rough patch. Look for the following signs where possible to make sure you’re working with a reputable company.
- It follows fee regulations. Stay away from lenders who charge more than $21 in fees per $100 borrowed.
- It doesn’t allow roll-overs or multiple loans. Newfoundland and Labrador regulations don’t allow payday lenders to give out multiple loans. In addition, you cannot roll-over your loan, meaning you can’t add what you owe on one payday loan onto a second payday loan.
- They provide same-language contracts. Payday loan contracts should be written in a language you understand and should clearly spell out your contractual obligations – including charges, terms and conditions of the loan.
- The lender doesn’t request access to your bank account. The lender shouldn’t request excessive personal or banking details like your direct deposit information.
Watch out for online lenders
Predatory payday lenders are more inclined to work out of provinces that don’t enforce tough laws or regulations, and until very recently, Newfoundland and Labrador was one of them. While some of these predatory lenders may work in Newfoundland and Labrador, the majority set up shop online. If you’re thinking about taking out an online payday loan in Newfoundland and Labrador, know the risks and your rights before you sign on the dotted line. Watch out for the following:
- Illegally high interest rates or fees. Lenders that charge fees higher than $21 per $100 borrowed are breaking payday loan regulations surrounding allowable interest rates. Make sure to report their activities to Service NL at 1-709-729-4834.
- Identity theft. Online lenders have been known to work with third-party companies to steal customer’s personal and banking information. Avoid handing over direct deposit information and be wary of lenders who want personal details like your Social Insurance Number.
There are risks associated with borrowing payday loans both online and in-person. Look for short-term alternatives where possible to save money and protect yourself from identity theft or a hacked bank account.
How to file a complaint against a lender
If you feel that the payday loan lender you’ve signed on with is doing something illegal or unethical, then you can file a complaint with Service NL at 1-709-729-4834. You may have a case against your lender, particularly if they’re charging more than $21 in fees per $100 borrowed.
Payday loan alternatives in Newfoundland and Labrador
If you’re not sure you want to take out a high-interest payday loan, you have other options. Here are some programs and lenders you might want to check out.
Newfoundland and Labrador assistance programs
Newfoundland and Labrador has a number of programs that can provide some much-needed relief for residents and newcomers who are struggling to make ends meet.
- Income assistance provides financial assistance to low-income individuals and families who need help with covering the costs of basic necessities like food, shelter and heating.
- Child benefit provides a monthly cash benefit to help low‑ and modest‑income families with the costs of raising children under 18 years of age.
- Health related services provide financial support for low-income individuals to receive vision care, prescription drugs, medical transportation, dental services and other incidentals.
Local financial institutions
Some credit unions and local banks offer less expensive small-dollar financing with longer repayment terms. You might also want to look into credit builder loans, which come in small amounts and can help you improve your credit score by reporting every on-time repayment you make to credit bureaus. You also typically have more time to pay it off and will face much lower interest rates when compared to payday loans.
If you’re struggling with your personal finances, you might consider enrolling in a credit counselling program. These can help you make a budget to manage or consolidate your debts.
How can I apply for a payday loan?
If you’re interested in applying for a payday loan in Newfoundland and Labrador, you’ll need to meet the following eligibility criteria:
- Be at least 19 years old
- Provide proof of 3 months of continuous employment
- Show proof of address (e.g., they can ask to see a utility bill)
- Have an active chequing account
To complete your application successfully, prepare to submit some basic information:
- Personal details, such as your name, date of birth, Social Insurance Number and a valid form of ID
- Contact details, such as your residential address, email address and phone number
- Details about your employment and income
Before signing on for a payday loan, look for other more affordable forms of financing. If you’re set on taking out a payday loan, familiarize yourself with the laws of Newfoundland and Labrador to ensure you don’t pay more than $21 in fees per $100 borrowed. Be wary of unlicensed lenders and make sure you’re in the position to pay off the payday loan in full on the due date to avoid paying interest.