A payday loan is up to $1,500, due within 62 days, at up to $14 per $100. An instalment loan is usually larger, repaid in fixed payments over months or years, and since January 1, 2025 can’t exceed 35% APR. If you can’t repay by your next payday, an instalment loan usually costs less in total.
How do they compare?
| Payday loan | Instalment loan | |
|---|---|---|
| Amount | Up to $1,500 | Usually $500 to $35,000 or more |
| Term | Up to 62 days | Usually 6 months to 5 years |
| Cost limit | $14 per $100 in regulated provinces | 35% APR |
| Repayment | Usually one payment on payday | Fixed regular payments |
| Credit check | Often light or none | Usually yes |
| Builds credit | Rarely | Often, if reported |
| Available in Quebec | No | Yes |
What does $1,000 cost each way?
A $1,000 payday loan costs $140 and has to be repaid within 62 days. A $1,000 instalment loan at 35% APR repaid over six months costs roughly $105 in interest, in payments of about $184 a month. At a credit union rate of 12%, the same six-month loan costs about $35. The payday loan is faster and easier to qualify for; the instalment loan is easier to repay.
When does each make sense?
- A payday loan can work for a small, one-time gap you’re certain you can repay in full on your next payday.
- An instalment loan fits a larger expense, or any amount you’d struggle to repay in one go. It’s also the usual way out of repeat payday borrowing.
Koke’s application page sends your answers to our matching partner LeadScout, which works with lenders offering both short-term and instalment loans. Work out a payday loan’s cost first.