Rules · Payday loan rules in Canada
Payday loan rules in Canada
Where a province licenses payday lending, federal regulations cap the cost of borrowing at $14 per $100 advanced, and a province may set a lower cap. Quebec does not license the product at all. This page collects the rules with their publishers.
Published values
| Item | Value | Note | Publisher |
|---|---|---|---|
| Maximum cost of borrowing (licensed provincial regime) | $14 per $100 advanced | A province may set a lower cap, and the lower figure applies. | Government of Canada (Canada Gazette) |
| Typical maximum loan size | $1,500 | The federal rules describe the payday product at this scale. | Financial Consumer Agency of Canada |
| Typical maximum term | 62 days | Payday lending is short-term by definition. | Financial Consumer Agency of Canada |
| Quebec | Payday lending not licensed | Quebec does not license payday lending, which effectively prohibits the product in the province. | Government of Canada (Canada Gazette) |
| Provinces with a licensing regime | 9 | Ontario, Alberta, British Columbia, Manitoba, Saskatchewan, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador operate regimes; the three territories do not have an equivalent regime. Confirm the current position with the regulator. | Government of Canada (Canada Gazette) |
| Provincial regulators | confirm with the publisher | Provincial and territorial consumer affairs offices license and supervise payday lenders. | Financial Consumer Agency of Canada |
A blank value means we could not verify a current figure against the publisher's own publication. We leave it blank rather than publish a guess.
What the federal rules do
The federal payday lending regulations set the maximum cost of borrowing for a payday loan in any province that operates a licensing regime. They do not create a national licensing scheme; they set the ceiling that provincial regimes work under.
Where provinces differ
A province that licenses payday lending may set a lower cost cap than the federal one, and the lower figure applies. Quebec does not license payday lending, which effectively prohibits the product there. Because licensing is provincial, the regulator you would complain to also depends on where you live.
Why the annualised cost is the honest comparison
A payday loan is priced per $100 advanced for a short term, which makes it hard to compare with an annual-rate product. Converting the charge to an annualised equivalent is the only meaningful comparison, and it is why the cost figures here look so different from personal loan rates.
What to check before you use one
- Whether your province licenses the product at all.
- The current provincial cap, which may be lower than the federal one.
- The total charge, including any fee for a returned pre-authorized debit.
- What happens if you cannot repay on the agreed date.
The cost of borrowing cap in practice
A cap expressed per $100 advanced is a simple idea with a complicated consequence: the smaller the loan and the shorter the term, the less the cap looks like a rate and the more it looks like a fee. That is why two borrowers can pay the same charge for very different amounts of money, and why the annualised figure is the only number worth comparing against another product.
Rollovers and returned payments
The rules that cap the charge do not prevent a borrower from extending the arrangement, and they do not stop a lender charging for a payment that is returned. Both add cost on top of the original charge, and both are much more likely when the loan was taken for a gap that has not closed. If the gap will still be there on the repayment date, a payday loan is not solving the problem; it is moving it.
Alternatives worth pricing first
Before using short-term credit, price the alternatives honestly: a payment arrangement with the creditor you already owe, a small line of credit, a credit union, an employer advance, or a nonprofit credit counselling service. None of them is guaranteed, but each is usually cheaper than the cap allows.
Questions
Is payday lending legal in Canada?
It is legal where a province licenses it. The federal regulations cap the cost of borrowing in those provinces at $14 per $100 advanced. Quebec does not license the product, which effectively prohibits it there.
Can a province charge less than the federal cap?
Yes. The federal figure is a ceiling, and a province may set a lower cost of borrowing. Where it does, the lower figure applies to loans made in that province.
Who regulates payday lenders?
Provinces license and supervise payday lenders. Federally regulated financial institutions fall under the Financial Consumer Agency of Canada, but payday lenders are generally licensed provincially.
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Sources
- Maximum cost of borrowing (licensed provincial regime) —
- Typical maximum loan size —
- Typical maximum term —
- Quebec —
- Provinces with a licensing regime —
- Provincial regulators —
Every figure on this page is attributed to the publisher above. Where a value could not be verified against the publisher's own publication, it is left out rather than estimated.