Payday loans in Quebec
You'll pay a maximum of 35% annual interest (AIR) on a payday loan.
Need fast cash? Although you might consider taking out a payday loan, they’re not easy to get in Quebec due to powerful government regulations. 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 province. But don’t worry, there are plenty of much cheaper alternatives that can get you the cash you need.
This guide breaks down regulations for payday loans in Quebec, 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. Each province has its own regulations when it comes to payday loans, and in Quebec, the Consumer Protection Act protects those who take out payday loans. Quebec has tight laws governing financial services – and these laws are especially tight when it comes to payday loans, which has resulted in payday lenders being effectively banned from the province. The Quebec government has limited the annual interest rate (AIR) on payday loans to 35%, which has ultimately curtailed the operation of payday lenders in the province.
For example, if you take out a 2 month loan of $1,000 with an annual 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.
Here are the rules surrounding payday loans in Quebec:
- You can’t be charged more than 35% annual interest rate (AIR).
- The maximum amount you can borrow is $1,500.
- The maximum loan term is 62 days.
- You can’t get a new payday loan until you pay off the 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.
- High risk loans have a 10-day cooling-off period in Quebec.
- 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 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 a 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. This is why it’s essential that you know the regulations surrounding payday loans in Quebec so that you can avoid online scammers.
Can I get a no credit check loan in Quebec?
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’re struggling to make it between paycheques, a short-term loan has the potential to help you through your financial troubles. But keep in mind payday loans can be 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 Quebec is legit?
Quebec has strict regulations for lenders, with a maximum allowable annual interest rate of 35% on payday loans. Look for the following signs to make sure you’re working with a legitimate lender.
- The lender follows rate and fee regulations. Stay away from lenders that don’t follow the 35% annual interest rate maximum.
- It doesn’t allow roll-overs or multiple loans. Quebec law doesn’t allow payday lenders to give out multiple loans, or to allow borrowers to use a second payday loan to pay off the current one.
- 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. You’ll need to watch out for the following:
- 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.
- 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.
Payday loan alternatives in Quebec
Since payday loans are hard to come by in Quebec, you have other short-term loan 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 those 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 loans. 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. Once you build up your credit score, you’ll be eligible for much more competitive and affordable financial products.
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 a payday loan?
If you’re interested in applying for a payday loan in Quebec, 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 payday loan, consider other options before applying. Since payday loans are hard to come by in Quebec due to strict regulations, you’re likely better off applying for a personal loan, using your credit card or borrowing money from friends and family to make ends meet between paycheques. If you do 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 and in full to avoid paying additional fees or interest.