Mistakes, Complaints and Official Sources
Payday loans in Canada in 2026: the $14 per $100 limit, cooling-off and your rights
How payday loans are regulated in Canada since 2025: the federal $14 per $100 maximum, Ontario's rules on cancellation, loan size and repeat borrowing, the real APR and cheaper options.
A payday loan in Canada is a small, short loan, $1,500 or less for up to 62 days, repaid from your next pay. These loans are exempt from the Criminal Code's 35% APR limit only if the lender is licensed in a province that regulates them, and since 1 January 2025 the federal maximum for that exemption is $14 per $100 borrowed. Ontario, for example, aligned its rules on that date and caps the cost at $14 per $100. That sounds small, but on a two-week loan it equals an APR of about 365%. Ontario borrowers also get two business days to cancel, a limit of 50% of net pay per loan and an extended payment plan for repeat borrowing.
Part of personal loan mistakes and official sources. General information only.
How the federal and provincial rules fit together
| Layer | Rule |
|---|---|
| Criminal Code s. 347 | Interest above 35% APR is a criminal rate |
| Criminal Code s. 347.1 | Exempts payday loans of $1,500 or less, for 62 days or less, by lenders licensed in a designated province with laws that protect borrowers and limit the total cost |
| Criminal Interest Rate Regulations (from 2025) | The total cost of an exempt payday loan may not exceed $14 per $100 borrowed |
| Provincial payday loan laws | Licensing, cost caps at or below the federal maximum, cancellation rights, limits on repeat loans, collection rules |
Before 2025 each province set its own cap; Ontario's, for example, was $15 per $100. Older websites and lender materials may still show those figures.
What $14 per $100 really costs
Illustrative calculations:
| Loan | Cost at $14 per $100 | Term | Approximate APR |
|---|---|---|---|
| $300 | $42 | 14 days | about 365% |
| $500 | $70 | 14 days | about 365% |
| $500 | $70 | 10 days | about 511% |
| $500 | $70 | 7 days | about 730% |
APR = cost ÷ amount × 365 ÷ days. On $500 for 14 days: 70 ÷ 500 × 365 ÷ 14 ≈ 3.65, or 365%.
The repeat-borrowing effect. If you take out $500 and, each time you repay it, need to borrow again because the repayment left you short, six consecutive two-week loans cost $420 in fees, without reducing what you need to borrow. This is why provinces restrict rollovers and require extended payment plans.
Ontario's rules as an example
Ontario's Payday Loans Act, 2008 and its regulations, as described on the Ontario government's payday loan page, provide that:
- the cost of borrowing is capped at $14 per $100 (from 1 January 2025);
- you can cancel within two business days without a reason or penalty (s. 30 of the Act);
- a lender may lend no more than 50% of your net pay per loan;
- rollovers are prohibited: the same lender cannot give you a new payday loan to pay off an existing one;
- if you take three loans within 63 days, the lender must offer an extended payment plan spread over several pay periods, with no fee to prepay;
- the fee for a dishonoured cheque or pre-authorized debit is capped (at $20 from 1 January 2025), charged once;
- interest on a defaulted loan is capped at 2.5% a month, non-compounding, on the outstanding principal;
- lenders must be licensed, must show the cost as an APR in advertising, and may not take wage assignments or sell other products with the loan;
- collection contact is limited, for example to no more than three contacts a week and none with your family, friends or neighbours.
Other provinces have similar but not identical rules. Federal orders designate eight provinces for the s. 347.1 exemption: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, and Newfoundland and Labrador. Prince Edward Island's designation order (SOR/2014-277) is still not in force in the federal consolidation current to 30 September 2026. Quebec and the territories are not designated, so the 35% APR limit applies in full to payday-style loans there. Check your provincial office before borrowing.
Online payday loans
Many payday loans are now online. The same rules apply if you live in a province that licenses payday lenders: the online lender must hold a licence in your province. A lender that is not licensed there cannot rely on the payday exemption, and the 35% APR limit applies to it. Warning signs include no physical address, no provincial licence number, requests for an upfront fee and pressure to sign quickly; see advance-fee loan scams.
Cheaper options to try first
| Option | Why it may be cheaper |
|---|---|
| Ask your employer for a pay advance | Often no cost |
| Overdraft protection or a small line of credit at your bank | Far lower annual rates, even with fees |
| A small loan from a credit union | Some credit unions offer small-dollar loans |
| Payment arrangement with the bill issuer | Utilities, landlords and phone companies often agree to a plan |
| Non-profit credit counselling | Free advice on budgeting and creditor negotiations |
| Credit card cash advance | Expensive, but usually much cheaper than 365% |
If you are already in a payday loan cycle
- Stop taking new loans to repay old ones.
- In Ontario, if you have taken three loans within 63 days, ask for the extended payment plan.
- Contact a non-profit credit counsellor; see unmanageable loan debt.
- If the lender breaks the rules, complain to your provincial consumer protection office.
Frequently asked questions
Can a payday lender charge more than $14 per $100 if it calls the extra a fee?
The total cost of borrowing includes interest, fees and charges for the loan. A licensed lender charging more than the provincial or federal limit risks losing the exemption and breaking the law. Complain to the provincial regulator.
Do payday loans appear on my credit report?
Payday lenders often do not report on-time payments, but unpaid loans sent to collections can appear and hurt your score.
Can I cancel after the cooling-off period?
No, once the cooling-off period ends the agreement stands. You can usually still repay before the due date, but ask the lender in writing whether any part of the cost of borrowing is reduced if you do. In Ontario, an extended payment plan can be prepaid without a fee or penalty.
Are instalment loans from the same companies payday loans?
Not necessarily. A larger or longer loan is outside the payday definition and must stay under 35% APR; see high-cost instalment lenders.
Sources
- Ontario: Payday loan, your rights — current Ontario caps and borrower rights
- Ontario e-Laws — Payday Loans Act, 2008 and O. Reg. 98/09
- Justice Laws Website — Criminal Code ss. 347 and 347.1; Criminal Interest Rate Regulations
- Consumer Protection BC — payday lending in British Columbia
- Alberta payday loans — Alberta rules
