Learn how to get a short-term loan in Quebec.
Quebec has limited the rate of interest on payday loans to 35% annual interest, which makes it largely unprofitable for payday loan companies to operate in the region. This guide breaks down provincial regulations for payday loans, and explores some short-term alternatives that might help you stay afloat between paycheques.
Can I get a payday loan in Quebec?
Yes and no. The province has tight laws governing financial services, and these laws are especially tight around payday loans.
The Quebec government has limited the rate of interest on payday loans to 35%, which has curtailed the operation of payday lenders in the province.
For reference, if you take out a 2-month loan of $1,000 with a monthly APR interest rate of 35% – the interest that you will pay will amount to $43.96. This makes payday loans a largely unprofitable service for lenders.
Four quick facts about payday loans in Quebec
- Maximum loan amount: $1,500
- Minimum loan term: 1 – 2 weeks
- Maximum loan term: 2 months
- Maximum interest: 35% Annual Interest Rate (AIR)
What fees will I have to pay?
Lenders in Quebec are only allowed to charge 35% annual interest rate on payday loans, which is comparable to the rate you might pay for a cash advance on your credit card. This has put the majority of brick-and-mortar lenders in the province out of business. That being said, unlicensed and online lenders still operate in Quebec, often charging higher than allowable rates. Since online sources are much harder to regulate, it’s difficult for the Canadian Government to get these websites shut down.
Can I get a no credit check loan in Quebec?
You can with some online 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.
What should I keep in mind before applying?
If you decide to go with an online lender, be aware that they are likely unlicensed and therefore not abiding by provincial regulations for payday loans. 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.
How can I tell if a lender in Quebec is legit?
Quebec has strict regulations for lenders, with a maximum allowable interest rate of 35% on payday loans. Look for the following signs to make sure you’re working with a legit lender.
- The lender follows rate and fee regulations. Stay away from lenders that don’t follow the 35% maximum AIR.
- It doesn’t allow rollovers or multiple loans. Quebec 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 in French, the contract must be in French.
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. These lenders can be dangerous for the following reasons:
- 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 Quebec 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 Quebec to prosecute them. That’s why it’s so important to make sure your lender is licensed to operate in Quebec before you borrow.
How to file a complaint against a lender
If you want to file a complaint against a lender, you can contact Consumer Protection Quebec at 1 888 672-2556, who will act on your behalf to contact the lender. If they find that your lender violated provincial law, they 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 Quebec
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.
Quebec assistance programs
Quebec has some programs that can help lower the costs of everyday expenses for some residents and newcomers who are struggling to make ends meet.
- Social Assistance provides last-resort financial assistance to individuals who do not have a severely limited capacity for employment and who are unable to provide for their basic needs because of their financial situation.
- Child assistance payment provides low-income families with financial assistance to cover expenses like medical bills, food, rent and utility bills.
- Resettlement Assistance Program provides financial assistance to refugees and protected persons for accommodations, essential clothing, household effects and living expenses.
- Disability Income Support helps people with disabilities who are in financial need pay for living expenses, like food and housing.
Local financial institutions
There are a number of credit unions and local banks that may offer short-term loans for a fraction of the cost of regular payday lenders pricing. Some financial institutions also offer 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.
If you’re struggling with your personal finances, you might want to also consider enrolling in a credit counselling 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 Quebec, 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 find yourself in need of a short-term loan, consider other options before taking out a payday loan online. If you decide to take out a payday loan online, make sure you know the risks and look for the best deal on rates and fees. Be wary of unlicensed lenders and pay back your loan on time to avoid paying additional fees or interest.