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Learn about payday loan scams and compare legitimate lenders

We show you how to find a reputable payday loan lender and avoid falling for a scam.

If you’re short on cash, you might be considering taking out a payday loan. You may also be wondering: Are payday loans a scam? Let’s take a look at why payday loans have a poor reputation, as well as common scams you should watch out for. Finally, we’ll discuss how you can get a legitimate payday loan from a reputable lender in Canada.

Are all payday loans scams?

Not all payday loans are scams – there are legitimate lenders that abide by any provincial laws in place and offer financial help to those in need.

However, since payday loans can be extremely expensive, this may be why they have acquired a reputation for being scams. On average, you’ll pay $15 to $25 per $100 you borrow, depending on the province or territory you reside in. This calculates out to at least a 3-digit annual percentage interest rate (APR), usually sitting somewhere around the 400% mark.

The cycle of debt

Payday loans are also notorious for trapping consumers in endless cycles of debt. Since these loans are so expensive, borrowers often have trouble paying them off, causing them to take out more payday loans to pay off their debts.

With this said, there are payday loan schemes that really are scams. To protect yourself, you’ll need to know what to watch out for. Jump to list of scams.

⚠️ Warning: Be cautious with payday loans
High-cost payday loans are unsustainable for borrowing over a continued period of time and are expensive as a means of longer-term borrowing. View payday costs and regulations by province here. If you're experiencing financial hardship call Credit Counselling Canada for free financial counselling (Monday-Friday 8:00am-5:00pm at +1 866-398-5999). You may also want to consider payday loan alternatives.

Which payday loan providers are legitimate?

ProviderLicensed?Transparent fees?How it’s legit
  • Canadian Consumer Finance Association (CCFA) member
  • Free app available on Apple and Google Play
  • 24/7 customer support
  • Served 500,000+ people since 2014
  • 4.5/5 stars based on 2,400+ Trustpilot reviews
  • Licensed payday lender in BC, ON
  • Cheaper than industry standards
  • Founded in Australia in 2020, then expanded to Canada in 2023
  • Has over 310,000 users worldwide
  • Rated 4.8/5 stars on the Apple App Store and 3.8/5 on the Google Play Store
  • CCFA member
  • Accredited by the Better Business Bureau
  • Online lender with physical offices
Cash MoneyYesYes
  • CCFA member
  • Founded in 1992, has served nearly 1.2 million consumers
  • Has an active fraud department
Money MartYesYes
  • CCFA member
  • Site is verified by Entrust, a global leader in data protection
  • Over 120 store locations across Canada
  • Privacy officer and customer support available
My Canada Payday LoansYesYes
  • CCFA member
  • It’s operated by Westrock Financial Ltd., which is BBB-accredited
  • 4.4 rating on Trustpilot based on 960+ reviews
  • 100% Canadian-owned, established in 2010 in BC
  • Has stores across Ontario and B.C. that are open 7 days a week. You can also call 24/7 for customer support
  • Has a 4.8 star rating on Trustpilot based on 5,500+ reviews
Mr. PaydayYesYes
  • Uses secure socket layer technology (SSL) to encrypt your personal information
  • Founded in 2002 and has one store location in Vancouver
  • Around the clock customer service
Speedy CashYesYes
  • Founded in 1998 and has over 20 branches across Canada
  • Customer service available via live chat 9 am – 4 pm (PST)
  • 4.5/5 rating on Trustpilot based on over 9,500 reviews
Loan ExpressYesYes
  • Has been in operation for over 15 years
  • Customer service available by phone 9 am – 3 pm (PST) Mon – Fri
  • 4.8/5 rating on Trustpilot based more than 7,800 reviews
Cash 4 YouYesYes
  • CCFA member
  • Was founded in 2001 and now has 100+ stores
  • Has serviced millions of Canadians
  • 4.9/5 stars on Trustpilot based more than 20,300 reviews
Maximum borrowing costs of payday loans per province
Always refer to your contract for exact repayment amounts and costs.
Province Max. cost of borrowing a $100 payday loan Cooling off period to cancel loan Max. penalty for returned cheque or pre-authorized debit
Alberta $15 2 business days $25
British Columbia $15 2 business days $20
Manitoba $17 48 hours excluding Sundays and holidays $20
New Brunswick $15 48 hours excluding Sundays and holidays $20
Newfoundland and Labrador $14 2 business days $20
Nova Scotia $15 Next business day (2 days for online loans) $40 (default penalty)
Ontario $15 2 business days $25
Prince Edward Island $15 2 business days N/A
Quebec Limit of 35% AIR N/A N/A
Saskatchewan $17 Next business day $25

Are other payday loan companies legitimate?

How payday loan scams work and how to avoid them

Like many financial industries, the payday loan industry has scammers that prey on people who desperately seek money. Most scams revolve around consumers unwittingly giving out sensitive information or sending money to unscrupulous individuals.

Here are 3 common payday loan scams and how to avoid them:

The scam: Charging an upfront fee

  • How it works: A company posing as a payday loan lender will guarantee you a loan if you pay an upfront fee first. The company may ask for the money to be sent as a wire transfer, money order, gift card or some other form that will be hard for you to get back once sent. After the company receives the upfront fee, they will disappear without giving you the loan they promised.
  • How to protect yourself: To avoid this scam, don’t give any money to a lender in order to get a loan. Legitimate payday lenders do not charge fees before you’re approved for a loan. Any one-time fees for establishing the loan should only be charged after you’re approved and you have received your funds. Also, be wary of guaranteed offers. A legitimate lender cannot guarantee a loan without assessing your full application.

The scam: Payday loan collection

  • How it works: In this common payday loan scam, someone will call you claiming to be a debt collector. They may threaten you with legal action or arrest if you don’t pay. The caller may also have your personal details – your bank account number, for instance, or even your Social Insurance Number. Having this information doesn’t mean the call is legitimate. More likely, it means that someone else sold your information to a third party.
  • How to protect yourself: Don’t give out any personal information over unsolicited calls, and don’t send money to anybody claiming to be a payday loan collector. If you do currently have a loan, call your lender directly to verify the terms of repayment.

The scam: Fake online form

  • How it works: In this scam, you’re asked to fill out an online form to receive a payday loan. After you’ve entered your bank account information, the operators of the website won’t actually extend a loan to you. Instead, they’ll enroll you into some type of membership program that will take money from your bank account.
  • How to protect yourself: To avoid falling prey to this type of scam, thoroughly research any payday loan website you’re thinking about using. Additionally, read all of the fine print to make sure you understand the terms and conditions.

How to protect yourself from a payday loan scam

  • Compare multiple payday loan providers. It may be difficult to gauge the legitimacy of one payday loan website by itself, but you may be able to spot red flags when you look at multiple websites and draw comparisons between them.
  • Look for information and reviews online. Negative information (or even the lack of information) online can point to a payday loan scam. Always check for contact information and head office locations.
  • Be wary of unsolicited phone calls. Don’t accept a payday loan offer through the phone – there’s probably a better deal elsewhere. Additionally, there’s no way you can verify the legitimacy of the caller.
  • Understand the laws governing payday loans in your province. Knowing the payday loan regulations of your province will help you gauge whether a payday loan operator is legitimate or simply trying to scam you.
  • Check the lender’s licence. Under provincial Payday Loans Acts, payday lending businesses must obtain valid payday loan licences. Legitimate lenders will prominently display their licences in the provinces they operate in on their websites and as a prompt before borrowers proceed with their application.
  • Be wary of offers that are too good to be true. Examples include guaranteed approval, low rates for bad credit and no credit checks. Keep in mind that no credit checks can be a red flag, but there are also legitimate lenders that don’t do credit checks. In such cases, they’ll focus on your income to determine your eligibility.

What to do if you've been scammed

Sometimes it can be hard to tell a scam from the real thing. If you think you’ve been scammed, there are steps you can take to protect your personal information and your money from being stolen. Consider the following:
  • Contact the police. Your local police should have a non-emergency number that you can call when you know you’ve been scammed. File a police report in order to legitimize the situation. Your bank and credit bureau will want to see that you’ve taken this action, so it’s an important first step.
  • Report the lender to your provincial consumer protection agency. Contact your provincial consumer affairs agency, (like Consumer Protection Ontario or FCSC in New Brunswick, for example) to report the lender. You can typically call or email your complaint to the agency.
  • Contact your bank. Since even legitimate lenders will ask for your bank account information, you may have given this to a scammer. Even if they haven’t stolen anything from your account yet, putting your bank on alert will help them track your account for any unusual activity.
  • Contact Service Canada. If you’ve given out your Social Insurance Number to a scam artist, you’ll need to contact Service Canada as soon as possible to prevent identity theft.
  • Contact the two credit bureaus. They can put a freeze on your credit report in case any suspicious queries pop up. This will help prevent future damage from scammers trying to use your credit to buy expensive items.

These steps might not be able to get you your money back, but they will help you to protect your identity. The best way to prevent a scam is to know what one looks like, so familiarize yourself with this page in order to know what to avoid in the future.

Finder survey: How many payday loans did Canadians of different ages get between May and July 2023?

ResponseGen ZGen YGen XBaby Boomers
4 and over1.7%1.39%0.63%1.26%
Source: Finder survey by Pollfish of 1013 Canadians, August 2023

Look at these factors before taking out a payday loan

  • The fine print. Before taking out a loan, you’ll need to agree to a lender’s terms and conditions. Take your time to read the fine print before agreeing to anything. If there’s anything you don’t understand or don’t agree with, don’t be afraid to ask questions or look elsewhere for a loan. You’re not obligated to sign a loan contract.
  • The interest rate. A reputable lender will tell you a loan’s interest rate up front. Once you know the rate, you can calculate how much you’ll pay in interest. Consider your budget, including your income and expenses, and think about your ability to repay the loan.
  • Fees. Make sure you understand any fees you’ll pay to take out a loan. Some lenders add hidden fees to their loans, so confirm the total amount you’ll pay before you agree to anything. For example, some payday loans may come with fees for loading funds onto prepaid debit cards.

Payday loan alternatives

Since payday loans can be very expensive, it’s a good idea to consider your alternatives. Even if you need cash right away, a payday loan isn’t your only option.

Other options include:

  • Instalment loans. An instalment loan is a type of personal loan offered by online lenders with lower APRs and longer repayment terms than payday loans. Instead of making one lump sum payment, you will make repayments in instalments over a set period of time.
  • Lines of credit. With a line of credit, you can borrow up to a limit and pay interest on the amount you borrow. It’s a decent payday loan alternative because of its open term.
  • Bad credit personal loans. Those with a credit score below 560 can apply for and receive a bad credit loan they will pay back in instalments over time. This is a decent payday loan alternative due to its lower APRs and longer terms.
  • Debt consolidation. Consolidating your debt reduces the confusion of having multiple payments and may even offer a lower monthly payment while you eliminate your debt. You could save on interest and pay off your debt faster.

Bottom line

There are plenty of legitimate payday loan lenders in Canada, but there are also many disreputable companies in the industry. Be sure to do your research and thoroughly compare your options for a payday loan before applying.

Compare legitimate payday loans

1 - 5 of 5
Name Product Loan Amount Loan Term APR Turnaround Time Serviced Provinces Offer Table description
iCash Payday Loan
$100 - $1,500
7 - 62 days
Varies by province
As little as 2 minutes with Interac e-Transfer
24/7 instant approval and e-Transfer funding.
Same day cash up to $1,500 for car payments, rent, mortgage, home & appliance repair, and more. Income of at least $800/month required.
GoDay Payday Loan
$100 - $1,500
Up to 62 days
Varies by province
As little as 2 minutes with Interac e-Transfer
To apply, you'll need to be a Canadian resident over the age of 18 with a valid email address, phone number and an open bank account with a Canadian bank or credit union.
More Info
Wagepay Wage Advance Loan
$100 - $1,500
Up to 62 days
Varies by province
As little as 2 minutes with Interac e-Transfer
Lower and transparent fees. No late or NSF fees.
Get early access to a portion of your pay. Sign up in less than 3 minutes and receive funds via e-Transfer 24/7.
Money Mart Payday Loan
$120 - $1,500
1 - 62 days
Varies by province
As little as 1 hour after getting approved
To be eligible, you’ll need to be at least 18 years of age with a steady source of income and a chequing account. No credit check required.
More Info
Cash Money Payday Loan
$100 - $1,500
5 - 40 days
Varies by province
As little as 15 minutes with INTERAC e-Transfer
Instant decision and e-Transfer funding. Income of at least $1,000/month required.
More Info

Frequently asked questions about payday loan scams

Carmen Chai's headshot
Written by


Carmen Chai is a freelance writer at Finder, specializing in financial products. She is an award-winning Canadian journalist who has lived and reported from major cities such as Vancouver, Toronto, London and Paris. She has reported on personal finance, mortgages, and banking products for nearly a decade. See full bio

Chelsey Hurst's headshot
Co-written by

Associate editor

Chelsey Hurst is an associate editor at Finder. She loves empowering people to avoid financial pitfalls and make better decisions with their money. Chelsey has a Bachelor of Science from Redeemer University, a Master of Science from McMaster University, and has won multiple awards for research communication. In her spare time, Chelsey enjoys cooking and taking long walks in nature. See full bio

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