What counts as a payday loan?
In Canadian law, a payday loan is a small, short loan: $1,500 or less, for 62 days or less. Since January 1, 2025, the federal Criminal Code lets licensed payday lenders charge up to $14 per $100 in provinces that regulate them. Everywhere else, and for every other kind of consumer loan, the ceiling is an annual rate of 35%.
- Payday loan
- A loan of up to $1,500 for up to 62 days from a provincially licensed lender, repaid in one payment or a few instalments from your next pay.
- Cash advance
- Usually means the same thing in Canadian advertising. On a credit card, “cash advance” means borrowing cash against your card limit, which is a different, normally cheaper product.
- Short-term loan
- A broad term. It can mean a payday loan, or an instalment loan repaid over a few months, which is capped at 35% APR.
- Licensed lender
- A business holding a payday loan licence in the province where you live. Online lenders need one too.
How much can I borrow?
Up to $1,500. Ontario and British Columbia also cap each loan at 50% of your net pay over the loan period, and most lenders set their own lower limit for a first loan. Expect to be offered less than you ask for the first time.
What does it cost?
| You borrow | Fee at $14 per $100 | You repay |
|---|---|---|
| $300 | $42 | $342 |
| $500 | $70 | $570 |
| $1,000 | $140 | $1,140 |
| $1,500 | $210 | $1,710 |
Over two weeks, $14 per $100 works out to an annual rate of about 365%. That number is why payday loans are the most expensive common form of credit in Canada. Try your own numbers in the calculator.
How do I apply?
- Check the licence. Make sure the lender is licensed in your province.
- Apply online or in a store. You’ll usually need ID, proof of steady income, an active Canadian bank account and a phone number.
- Read the contract. It must show the amount, the total cost in dollars, the annual percentage rate and the due date.
- Receive the money. Often by Interac e-Transfer or cash in store, sometimes the same day once you’re approved.
How is it repaid?
Most lenders take repayment by pre-authorized debit on your next payday. Alberta requires at least 42 days and instalments that follow your pay schedule. Ontario requires an extended payment plan if you take three loans within 63 days. If a payment bounces, the lender can charge a capped fee and interest on the overdue amount, and your bank may charge its own NSF fee.
Can I cancel?
Most provinces with payday loan laws give you a short cooling-off period. In Ontario it’s two business days, with no fee and no reason needed. Check your province’s page for the exact rule.
Where are payday loans not available?
Quebec, Yukon, the Northwest Territories and Nunavut don’t license payday lenders, so loans there must stay under 35% APR. A typical payday loan isn’t legal for residents of those places.