You\u2019ve probably seen a payday loan storefront or online ad for quick cash loans at some point in your life. These loans are usually marketed by lenders as a remedy for unexpected financial emergencies. The catch? Payday loans come with exorbitant rates, which can ultimately create more financial strain than relief for Canadians.<\/p>
Payday loans<\/a> range from $100 to $1,500 and must be repaid in full on the borrower\u2019s next payday. They\u2019re designed to be easy to get. You can apply for one in less than 10 minutes, get instant approval, and either receive an e-transfer within minutes if you\u2019re applying online or walk out with cash if you\u2019re applying in person. You can get a payday loan if you have a low income, bad credit or both. Popular payday lenders include iCash, Cash Money and Money Mart.<\/p> The combination of instant funding and lenient eligibility requirements make payday loans an appealing option for people who need money urgently. However, their steep interest rates, short repayment terms and target market have led to a reputation for predatory lending.<\/p> As of January 1, 2025, payday loans across Canada cost $14 for every $100 borrowed, based on a new regulation that was first introduced in the 2023 federal budget<\/a> to crack down on predatory lending. The new borrowing fee is $0 to $3 cheaper for every $100 borrowed, depending on your province.<\/p> Despite the lower fee, payday loans are still extremely expensive, with annual percentage rates (APRs) reaching triple digits.<\/p> Here\u2019s an example of how much a $500 payday loan would cost, based on previous and current regulations, in Canada\u2019s most populated province.<\/p> Thankfully, payday loans are not as popular as other cheaper loan options. In the Finder: Consumer Sentiment Survey January 2025<\/i>, payday loans ranked as the sixth most favoured answer (4%<\/b>) for Canadians. Credit cards<\/a> (12%<\/b>) and lines of credit<\/a> (11%<\/b>) topped the list of loan products.<\/p>Current payday loan interest rates in Canada<\/h3>
Cost example: $500 payday loan in Ontario<\/h4>
<\/th> December 31, 2024<\/th> January 1, 2025<\/th><\/tr><\/thead> Loan amount<\/strong><\/td> $500<\/td> $500<\/td><\/tr> Loan term<\/strong><\/td> 14 days<\/td> 14 days<\/td><\/tr> Borrowing fee<\/strong><\/td> $15 for every $100 borrowed<\/td> $14 for every $100 borrowed<\/td><\/tr> Repayment amount<\/strong><\/td> $575<\/td> $570<\/td><\/tr> APR<\/strong><\/td> 391%<\/td> 365%<\/td><\/tr><\/tbody><\/table><\/div> Do Canadians commonly use payday loans?<\/h3>