Learn how to get a short-term loan in Ontario.
If you’re facing a financial emergency, you might find yourself in need of some fast cash. Enter payday loans: a quick and easy way to get your hands on emergency money before your next paycheque.
We’ve designed this guide to help you navigate the ins and outs of cash advance payday loans, so that you have as much information as possible before you sign on the dotted line.
Can I get a payday loan in Ontario?
Yes. Short-term loans are legal in Ontario. The Payday Loans Act, 2018 helps protect people who take out payday loans.
Each province has its own rules that govern pricing. The most money you can borrow in a payday loan in Ontario is $1,500 and lenders cannot give you more than 50% of your net monthly pay per loan.
The loan usually needs to be repaid in a short period of time (typically between 14 – 28 days) and you can’t get a new loan until your first one is paid off. Lenders must also offer an extended payment plan if you take out three loans within a 63-day period.
Cash Money Payday Loan
- Minimum loan amount: $50
- Maximum loan amount: $1,500
- Loan term: 12-14 days. Vary by province
- Turnaround time: Within 2 hours with INTERAC e-Transfer® if approved
- Key requirements: Be 18+ years old, provide proof of recurring income
Four quick facts about payday loans in Ontario
- Maximum loan amount: $1,500
- Minimum loan term: 2 – 4 weeks
- Maximum loan term: 2 months
- Maximum interest: $15 for every $100 that you borrow
Compare payday loans in Ontario
Check the websites of any providers you’re interested in to confirm they operate in your province.
What fees will I have to pay?
Although Ontario has laws in place to protect consumers from predatory lending, you’ll still need to pay a maximum of $15 for every $100 that you borrow. You have two business days to cancel a contract for a payday loan without having to pay a fee. The comparison 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%)|
Can I get a no credit check loan in Ontario?
You can with some lenders — but you might not want to. No credit check loans can come with extremely high rates and it can be hard to find a legit lender. Instead, you might want to look into a short-term lender that relies on a soft credit check, which doesn’t affect your credit score.
Getting a soft credit check takes less than a minute, so it won’t add time to your application. And many short-term lenders are willing to work with bad- or poor-credit customers, so you won’t necessarily be rejected. You might even be able to qualify for more competitive rates.
What should I keep in mind before applying?
If you’re struggling to make it between paychecks, a short-term loan has the potential to help you through your financial troubles. That being said, keep in mind that payday loans can be the most expensive solution for your short-term financial problems. It can pay off to think about other ways to solve your money issues.
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 score 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 Ontario is legit?
On top of restrictions on interest rates, fees and how much you can borrow, Ontario also regulates how payday lenders should act in certain situations. Look for the following signs to make sure you’re working with a legit lender.
- The lender displays an Ontario licence number. Always check that a lender is licensed; be aware that there are companies that pose as online as payday loan lenders but are actually just collecting your personal information to sell to actual payday lenders.
- It doesn’t allow rollovers or multiple loans. Ontario law doesn’t allow payday lenders to give out multiple loans.
- It provides contracts in the language you use to speak with your lender. This means that if you and your lender communicate in English, your contract must be in English. If it’s Spanish, your contract must also be in Spanish.
- It follows rate and fee regulations. Stay away from lenders who charge more than $15 per $100 loan.
Watch out for unlicensed lenders
Borrowing online can be a lot more convenient than visiting a payday lender in person. But it also comes with a higher chance of borrowing from an unlicensed lender. Consumer Protection Ontario warns borrowers against the following risks of borrowing from an unlicensed lender.
- Illegally high interest rates or fees. If you aren’t borrowing from a lender that’s working legally, there’s a chance you’ll end up paying more than Ontario allows lenders to charge you.
- Identity theft. Unlicensed lenders sometimes sell personal financial information to third parties, which could potentially lead to identity theft or a hacked bank account.
- Funds taken from your bank account without your permission. Some unlicensed lenders illegally withdraw money from borrower’s bank accounts if they’re unable to make repayments.
Unlicensed lenders can operate out of the province or even outside of Canada, making it difficult for Ontario to prosecute them. That’s why it’s so important to make sure your lender is licensed to operate in Ontario before you borrow.
How to file a complaint against a lender
If you want to file a complaint against a lender, you can send a preliminary letter of complaint to the business. If they fail to respond, you can contact Consumer Protection Ontario, who will act on your behalf to contact the lender. If Consumer Protection Ontario finds that your lender violated provincial law, it could take legal action against the business. This includes revoking its license, slapping it with a penalty and even filing a civil action to get a settlement for customers if the lender is facing numerous complaints.
Short-term loan alternatives in Ontario
If you’re not sure you want to take out a short-term loan, you have other options. Here are some programs and lenders you might want to check out.
Ontario assistance programs
Ontario has some programs that can help lower the costs of everyday expenses for some residents and newcomers who are struggling to make ends meet.
- Ontario child benefit provides low-income families with financial assistance to cover expenses like medical bills, food, rent and utility bills.
- Ontario Works can provide you with money and help you find a job during temporary financial difficulties.
- Resettlement Assistance Program provides financial assistance to refugees and protected persons for accommodations, essential clothing, household effects and living expenses.
- Income Assistance Program provides funding to First Nation communities to help their eligible members meet basic needs, such as food, clothing and shelter.
- Ontario Disability Income Support helps people with disabilities who are in financial need pay for living expenses, like food and housing.
Local financial institutions
Some credit unions and local banks offer less expensive small-dollar financing longer repayment terms. You might 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.
If you’re struggling with your personal finances, you might want to also consider enrolling in a credit counseling program. These can help you make a budget and manage your debts.
How can I apply for short-term loan?
If you’re interested in applying for a short-term loan in Ontario, you’ll need to meet the following eligibility criteria:
- Be at least 18 years old
- Prove 3 months of continuous employment
- Give proof of address (e.g., they can ask to see a utility bill)
- Have a 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
If you’re considering taking out a payday loan, familiarize yourself with the laws of Ontario to make sure you’re getting the best terms for your loan. As with all forms of credit, be prepared to pay for both the principal and accumulated interest.