Payday Loan Interest Rates in Canada

Payday loans are small loans with very short repayment terms and high borrowing fees. You could pay $14 for every $100 borrowed.

What are the payday loan interest rates in Canada?

Annual percentage rate (APR) is a loan’s interest rate and fees expressed as an annual cost. It gives you a truer view of a loan’s cost and helps you compare different loan types. Payday loan APRs are typically 365%, which is much higher compared to other types of loans.

Must read: Cash advances are a cheaper alternative

How do payday loan rates differ from other financial products?

Payday loans have higher APRs compared to credit card cash advances and personal loans for bad credit. Credit card cash advances typically have a 23% APR plus a fee, while bad credit personal loans max out at 35% APR.

Let’s go back to the $900 example. Here’s how the costs would compare:

	Payday loan ($14 for every $100 borrowed)	Credit card cash advance (23% APR + 5% fee)	Personal loan (35% APR)
Loan amount	$900	$900	$900
Loan term	21 days	21 days	6 months
Borrowing cost	$126	$11.91 + $45 = $56.91	$165.68 monthly payment, $94.08 in total interest

The credit card cash advance is the cheapest option. The costs of the bad credit personal loan and payday loan are almost the same in dollar terms. The key difference is the loan term; the personal loan has a longer loan term of six months, allowing you to spread out your payments.

Related: Payday loan alternatives in Canada

Can a payday loan interest rate change depending on my personal situation?

Unlike other types of loans, the borrowing fee of a payday loan is the same for borrowers and does not depend on personal factors, such as credit score and income. Lenders in the payday loan space tend to charge the maximum they’re legally allowed to, no matter your financial situation.

The payday loan’s APR, however, can change depending on your loan term. Let’s go back to the $900 loan example with a borrowing fee of $126:

Loan amount	Borrowing fee	Loan term	APR
$900	$126	14 days	365%
$900	$126	21 days	243%
$900	$126	42 days	122%
$900	$126	62 days	82%

Even with the maximum loan term allowed for payday loans, the APR is still very high.

Calculate the cost of a payday loan

Payday loan calculator

Enter your details to see the total loan cost, including APR.

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Loan term (5 - 62 days):

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Annual percentage rate (APR):

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Warning: Payday loans are a high-cost form of credit. A payday loan for $500.00 for 14 days with a total cost of borrowing of $70.00 has an annual percentage rate (APR) of 365%. This tool provides estimates only. Before you borrow, consider lower-cost alternatives like a bank loan, cash advance or line of credit.

What other fees come with payday loans?

If you want to take out a payday loan, a lender cannot charge you any fees other than the borrowing fee. However, if you don’t pay back your loan on time, you could be charged extra fees like NSF fees and late payment fees.

The risk of payday loans

Before getting a payday loan, examine your financial situation and decide if a payday loan is truly the best option for your financial needs. If you don’t think you can make the repayments, don’t take out a loan in the first place. Explore other options like a credit card cash advance, an installment loan or borrowing from friends or family. Payday loans should be a last resort.

If you decide that a payday loan is the right option for you, check that you’ll have enough income left to pay for other expenses once you repay your payday loan. Otherwise, you may find the need to apply for another loan.

How to compare payday loans

How fast can you get it?

Find out how long it takes for the lender to transfer the loan to you. If you apply in person at a store, you can walk out with your funds. If applying online, you can get a payday loan instantly.

Is the lender easy to contact?

Make sure the lender is easy to contact and lists a phone number and email address. It is also convenient if the company offers a live chat feature. Being able to reach the company is helpful in case you have problems with repayments or need to ask a question. If a lender does not list any contact information, this is a red flag, and you should reconsider borrowing money from this lender.

Does the site have clear information?

Look for a lender that lists all loan information clearly and is transparent about all the details. See if you can find information on fees and terms and conditions on the company’s website. If costs aren’t stated or there seem to be unclear or hidden fees, consider looking for another lender.

How to apply

If you’re interested in applying for a payday loan, follow these steps:

1. Research and compare your options. Take the time to compare the different lenders and the loans they offer.
2. Meet the eligibility requirements. To be eligible for a loan, you must be at least 18 years old or the age of majority in your province or territory, have proof of income and be a Canadian citizen or permanent resident. You may also need to have a valid bank account.
3. Apply. Once you decide on a lender, you can apply on their website or visit a branch in person if the lender has physical locations.