What is a payday loan?
It is a small, unsecured loan meant to cover a gap until your next pay. Federal law defines it as a loan of $1,500 or less for 62 days or less. You give the lender a pre-authorized debit or a post-dated cheque, and the loan plus its fee comes out of your account on the due date.
How does the process work, step by step?
- You apply online or in a store with proof of income, a bank account and ID showing you are an adult resident of the province.
- The lender decides. Some lenders check your credit file and some do not; each sets its own policy.
- You sign an agreement that states the amount, the fee in dollars, the due date and your right to cancel.
- You receive the money, typically by e-Transfer, direct deposit or cash.
- You repay the loan and the fee on the due date. In Alberta, repayment is spread over instalments.
What does it cost?
Since January 1, 2025 the maximum is $14 per $100 borrowed in every province with payday-loan rules. Borrow $500 and the fee is up to $70, so $570 is due. Over a 14-day term that is equal to roughly 365% a year, which is why a payday loan is among the most expensive ways to borrow.
What rules protect borrowers?
- Licence
- The lender must be licensed in your province, including online lenders.
- Cancellation
- You can cancel within a short cooling-off period — two business days in Ontario, British Columbia and Alberta — by returning the money, with no fee.
- No rollovers
- A lender cannot extend the loan for another fee or lend you more to repay the first loan.
- Failed payment
- The lender may charge a one-time fee if your cheque or debit is returned. Your bank may charge its own fee as well.
Is a payday loan right for a recurring shortfall?
No. It is built for a single, short gap. If you are short every month, the fee makes next month harder. Look at lower-cost alternatives or speak with a non-profit credit counsellor first.
Quick answers
Can I get a payday loan with bad credit?
Possibly. Payday lenders weigh income and banking history heavily, and each one sets its own credit-check policy. Approval is always the lender’s decision and is never guaranteed.
How fast is the money sent?
It depends on the lender and your bank. Many lenders state same-day e-Transfer once an application is approved, but timing is not something any comparison site can promise.