What can the lender charge me?
That depends on your province. Ontario sets clear limits: interest on the overdue principal is capped at 2.5% a month, not compounded, and a lender can charge no more than $20 once for a cheque or pre-authorized debit that bounces. In Alberta, a lender can charge 2.5% a month on the overdue amount plus a one-time fee for each bounced payment, on top of the original $14 per $100. Other provinces have their own caps; your lender’s agreement has to show them.
Your own bank will usually charge a separate non-sufficient funds (NSF) fee when the payment bounces. That’s often the biggest single cost of a missed payment.
Can they contact my family or my work?
In Ontario, no. A lender can contact you no more than three times a week, not counting regular mail, never on a statutory holiday, and never your spouse, family, household members, friends, neighbours or acquaintances. Alberta bans harassment, threats and false statements about police, courts, liens or garnishment. If a lender or collector crosses those lines, complain to your provincial regulator.
Will it hurt my credit?
Missing a payment usually won’t show up on its own, because many payday lenders don’t report to the credit bureaus. But if the debt is sent to a collection agency, the collection can appear on your credit report for years.
Can they take my wages?
Not on their own. A payday lender can’t take repayment straight from your paycheque in Ontario. To garnish wages, a creditor first has to sue you and win a court judgment.
What should I do if I can’t pay?
- Call before the due date. Ask for a payment plan. Some lenders will agree rather than send the debt to collections.
- Stop the bounce. If you know the payment will fail, tell the lender. Several bounced attempts mean several bank NSF fees.
- Don’t borrow to repay. A new payday loan to cover the old one doubles the cost. Lenders in Ontario, Alberta and BC can’t give you a new loan while one is outstanding anyway.
- Ask about an extended payment plan. Ontario requires one after three loans in 63 days.
- Talk to a non-profit credit counsellor. It’s free, and payday loans can be included in a debt management plan or a consumer proposal. See getting out of payday loans.