What is a payroll loan and what should you look for in a lender?

Payroll loans offer quick, but expensive cash. Here’s what you need to know before taking one out.

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Maybe you don’t have enough money to pay your rent or your car just broke down and needs pricy repairs to get it back on the road. If you find yourself short of cash, you may think that a payroll loan could help you out of your situation.

What exactly is a payroll loan and will it help you out financially? Find out in our guide below.

⚠️ 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 Credit Counselling Canada on 1800 007 007. It's open from 8:00am to 5pm, Monday to Friday. When comparing short-term loans, ensure you take into consideration all fees, charges and interest to understand how much your loan might cost in total.

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.

Cash Money Payday Loan

Apply online or in store and get approved for up to $1,500.
  • Minimum loan amount:
  • Maximum loan amount: $1,500
  • Interest Rate: Varies by Province
  • Fees: Up to $17 per $100 borrowed (rounded to nearest dollar)
  • Loan term: 12-14 days. Varies by Province
  • Turnaround time: In as little as 15 minutes with INTERAC e-Transfer® if approved
  • Key requirements: Be 18+ years old, provide proof of recurring income
Cash Money Payday Loan
  • Simple application process
  • Fast turnaround time
  • Extended business hours
Go to site More info

What is a payroll loan?

A payroll loan is more commonly known as a payday loan. It’s a short term loan – typically no more than $1,000 to $1,500 – that you usually repay when you receive your next paycheque. This type of loan is handy when you urgently need access to cash.

A payroll loan can get you cash quickly and easily, but it can also be very expensive.

There may be better personal finance options for you

Short term loans can be good in an emergency, but they may not fit your needs. There are plenty of other ways to get financing that are much cheaper, including installment loans, personal loans, credit card advances and borrowing money from friends and family.

A selection of short term loans you can apply for

Check the websites of any lenders you’re interested in to confirm they operate in your province or territory of residence.

Name Product Max. Loan Amount Serviced Provinces/Territories Turnaround Time Loan Term Interest Rate
Cash Money Payday Loan
Nova Scotia
New Brunswick
British Columbia
In as little as 15 minutes with INTERAC e-Transfer® if approved
12-14 days. Varies by Province
Varies by Province
Apply for your first $300 payday loan at a $20 borrowing cost (excludes Alberta, Manitoba, New Brunswick or Saskatchewan applicants). Residents of Manitoba and New Brunswick cannot apply for a loan online (must apply in-store).

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Pros and cons of payroll loans


  • They’re easy to get. Lenders rarely check credit histories for these types of loans, and the eligibility requirements are minimal. They’re more concerned with your ability to make your repayments.
  • Get cash quickly. As long as you have the necessary information handy, many applications can be completed online or in person in under ten minutes, and some lenders can get you the cash you need within just one business day.


  • Very expensive. You’ll pay significant interest rates regardless of how much you borrow. Interest for these types of loans tends to be $15 to $25 for every $100 you borrow, depending on the province or territory where you reside. This means if you take out a $500 payroll loan, you could pay $75 to $125 in interest fees alone.
  • Must be repaid quickly. Payroll loans are typically due on your next payday, whether that’s 7, 14 or 31 days away.
  • Can trap you in an endless cycle of debt. It’s important to be sure that you have the money to pay your loan back in full, including the interest and extra fees. Many borrowers fail to budget for their repayments and end up taking out more loans just to repay the debt. If you don’t think you can make the loan repayments, you may need to avoid taking out a payroll loan in the first place.

How to compare short term loan lenders

It’s an excellent idea to shop around before settling on a payroll loan or loan provider. Here’s what to look for when considering different lenders:

  • Reputation

    Although reputable and trustworthy payroll loan lenders do exist, the online payroll space is filled with deceptive lenders and loan scams.

    To protect yourself, thoroughly investigate lenders and read their reviews. If you’re considering an online lender, contact them for their physical address – any legitimate lenders will readily give you details about themselves.

  • Interest rates

    Compare interest rates between multiple lenders. A seemingly attractive interest rate might be beaten by a different lender.

    Interest rates are often expressed in APR (annual percentage rate), but some lenders express their rates as monthly percentages. Remember that if a loan’s monthly interest rate is 20%, its annual rate is 240% (or 20% times 12). APRs for many payroll loans tend to sit around 400% or higher.

  • Fees

    You may not only be paying interest on your loan – you might have to pay additional fees before or during your payday loan. You may be on the hook for administrative and processing fees, depending on the type of loan. Additionally, you will have to pay late fees if you don’t make your repayments on time.

    Before taking out any loan, read the lender’s terms and conditions thoroughly. Be sure that you understand every fee you’re asked to pay, and request clarification if you don’t.

Can I get a payroll loan if I don’t have a bank account?

Yes, you can get a payroll loan if you don’t have a bank account through two options:

  1. Prepaid credit card loans. You apply for your short term loan either online or in person at a store, and if you’re approved, they transfer your funds into an eligible loan account. They then register a prepaid credit card with that account, and either hand it to you in-store or mail it to you.
  2. In-store loan. You apply for your short term loan either online or in person at a store, and if you’re approved, you can pick up your money at the store.

Bottom line

Payroll loans are fast and easy to get with their stringent eligibility criteria, however that advantage is counterbalanced by a heavy downside – they can be extremely expensive.

Since payroll loans offer easy access to funds, they’ve thrown many borrowers down into deep spirals of debt. To avoid the same fate, consider alternative options like personal loans or borrowing from friends and family. If those aren’t viable alternatives for you, compare your short term loan options and be sure you can pay off the loan on time.

Frequently asked questions

Are payday loans available in my province or territory?

Payday loans are available in all provinces and territories across Canada. You should be aware that payday loans are regulated by individual provinces, meaning costs and fees can vary. Ensure that any lender you choose abides by the laws of the place you live.

At the time of writing in July 2018, the Yukon, Nunavut and the Northwest Territories do not have legislation regulating payday loans.

Find out how much lenders can charge across Canada

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