Payday loans in Prince Edward Island
You'll pay a maximum of $25 in fees for every $100 you borrow.
Payday loans are short-term loans used to cover unforeseen emergency expenses between paycheques. While these loans are far from the most affordable way to get your hands on fast cash, they are easy to get and convenient. But before you apply, you’ll want to consider alternative forms of financing.
We’ve designed this guide to help you navigate the ins and outs of cash advance payday loans in Prince Edward Island, so that you have as much information as possible before you sign on the dotted line.
Can I get a payday loan in Prince Edward Island?
Yes, payday loans are legal in Prince Edward Island. Each province has its own rules that govern costs and lending restrictions. In PEI, the Payday Loans Act helps protect those who take out payday loans.
Here are the rules surrounding payday loans in Prince Edward Island:
- You can’t be charged more than $25 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.
- Loans usually must be paid off within 1 – 2 weeks.
- The maximum loan term is 62 days.
- You can’t get a new loan until you pay off your first one.
- 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 two days to do so without facing a penalty. You also don’t have to provide a reason for cancelling.
⚠️ 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 Prince Edward Island
- Maximum loan amount: $1,500
- Minimum loan term: 1 – 2 weeks
- Maximum loan term: 62 days
- Maximum interest: $25 for every $100 that you borrow
What fees will I have to pay?
The Payday Loans Act allows lenders in Prince Edward Island to charge up to $25 for every $100 borrowed – which is the highest rate charged in any province in Canada. If you default on a payment, the lender can also charge you interest. You have two business days to cancel a contract for a payday loan without having to pay a fee – also known as a “cooling-off period”.
The table below shows the rates on a payday loan compared to the typical costs of some other types of loans for the same amount.
|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 Prince Edward Island?
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?
If you have your heart set on a payday loan, it’s important to shop around for the best deal. That being said, it’s also a good idea to think about other short-term loan alternatives since payday loans are usually the most expensive solution for your short-term financial problems. You could save big if you 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 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 Prince Edward Island is legit?
The best way to make sure a lender is legit is to check their credentials with Consumer, Labour and Financial Services at 1-800-658-1799. Look for the following signs to make sure you’re working with a reputable business.
- The lender displays a Prince Edward Island licence number. Lenders must possess a valid license issued by the province of Prince Edward Island in order to operate.
- The lender displays fees. The costs associated with loans must be displayed in a visible location on the lender’s premises as well as online.
- It doesn’t allow roll-overs or multiple loans. Borrowers must pay their first loan in full before they are eligible to take out a second loan.
- It provides contracts in clear and understandable language. All lenders must provide the exact details of loan costs, payment terms, total fees and interest rates in a contract written in a language that the borrower speaks fluently.
- It follows consumer protection laws. Fees should not exceed the allowable amount of $25 per $100 borrowed.
Watch out for unlicensed lenders
It’s not uncommon to run into an unlicensed lender when you take out a payday loan – particularly if you do so online. If you’re thinking about taking out a payday loan in PEI, make sure that you’re dealing with a licensed business and be aware of potential risks. Watch out for:
- Illegally high interest rates or fees. If a lender is attempting to charge fees higher than $25 per $100 borrowed, you can rest assured that they’re operating illegally.
- Identity theft. Unlicensed lenders don’t follow regulations imposed by the province. This can be particularly problematic when it comes to the security of your personal and banking information, putting customers at risk of identity theft or a hacked bank account.
- Funds taken from your bank account without your permission. Some online or unlicensed lenders have been known to resort to illegal ways to seek repayment from borrowers, including withdrawing money from their bank accounts or garnishing their wages.
There are more risks associated with borrowing payday loans both online and in-person. Make sure to read the fine print on payday loan contracts and look for short-term loan alternatives wherever possible.
How to file a complaint against a lender
You can contact Consumer, Labour and Financial Services at 1-800-658-1799 to discuss your options for filing a complaint. The organization will typically conduct an investigation if they believe that a payday loan company has breached Prince Edward Island’s payday loan regulations.
Payday loan alternatives in Prince Edward Island
Before you take out a high-interest payday loan, look into available alternatives. They can help solve your short-term money needs, while keeping you out of long-term debt.
Prince Edward Island assistance programs
Prince Edward Island has a number of programs that can provide some much-needed relief for residents and newcomers who are struggling to make ends meet.
- PEI Social Assistance helps people in financial need with support for food, shelter, medications, basic dental, glasses and other incidentals.
- Family or Seniors housing program offers a range of housing support programs, as well as affordable and subsidized housing for low-income families and seniors.
- AccessAbility Supports helps individuals living with disabilities to cover the costs of basic living expenses, housing and searching for employment.
Local financial institutions
There are many financial institutions – like credit unions and local banks – that are cropping up in the short-term loan space. These institutions typically offer much more competitive interest rates on loans, as well as longer repayment terms. In some cases, they also offer credit builder programs which provide smaller loans that can help build your credit score, allowing you to be eligible for more competitive financing products like personal loans.
If you’re struggling under the weight of unpaid bills, then you might like to consider registering with a credit counselling program which provides free debt and credit help. Credit Counselling with Family Service PEI is one option that can help you with budgeting and consolidating your debts.
How can I apply for a payday loan?
If you’re interested in applying for a payday loan in Prince Edward Island, you’ll need to meet the following eligibility criteria:
- Be at least 18 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
If you find yourself in need of a short-term loan, consider other options before heading to your nearest payday lender. If you think that this type of loan is the best option for you, shop around to find the best deal on rates and fees. Be wary of unlicensed lenders and pay back your loan on time and in full to avoid paying additional fees or interest.