Payday Loans in Canada: What They Cost and the Rules

A payday loan costs $14 for every $100 you borrow. Borrow $500 on a Tuesday and you hand back $570 on payday. On a two-week term that fee works out to about 365% a year, which is the legal maximum and also what nearly every lender charges.

What changed on January 1, 2025 is that the price stopped varying. It used to run from $14 in Newfoundland and Labrador to $17 in Manitoba and Saskatchewan. One federal rule now sets the ceiling for the whole country, and it caught a few provincial websites out.

How much does a payday loan cost in Canada?

The most a licensed payday lender can charge is $14 for every $100 advanced, and that has to cover every fee attached to the loan. The Financial Consumer Agency of Canada (opens in a new tab) puts the equivalent annual rate at approximately 365%, plus a one-time $20 charge if your cheque or pre-authorized debit bounces.

The fee doesn’t change with the length of the loan, which is the part most calculators skip. That same $70 on a $500 loan is about 365% a year if you repay in two weeks, and about 82% if the term runs the full 62 days some provinces allow. Nothing about the loan gets cheaper when you take longer. The annual rate is the same fee spread over a different number of days.

Why does every province charge the same $14 now?

Because Ottawa capped it. The Criminal Interest Rate Regulations (opens in a new tab) came into force on January 1, 2025, lowering Canada’s criminal interest rate from 60% measured as an effective annual rate to 35% APR. The same regulations set the limit on the total cost of borrowing under a payday loan agreement at 14% of the amount advanced.

Payday lending is carved out of the criminal rate by section 347.1 of the Criminal Code, and that carve-out is what lets a 365% product exist at all. Since 2025 it only holds where the cost of borrowing stays at or under $14 per $100. Charge more and the exemption goes.

So shopping around for a cheaper payday loan no longer finds one. Lenders sit at whatever the ceiling happens to be, and British Columbia’s own figures show it. While BC’s cap was $15, the average cost of borrowing there ran between $14.69 and $14.95 per $100 for five years running. The 2025 reporting year averages $14.48, and that year straddles the change, because BC’s reporting runs July to June.

Two provincial pages haven’t caught up. Manitoba’s Consumer Protection Office (opens in a new tab) and Saskatchewan’s Financial and Consumer Affairs Authority (opens in a new tab) both still publish $17 per $100, the old provincial maximum. Manitoba’s Public Utilities Board recommended in its February 2025 review (opens in a new tab) that the province drop its rate to “the maximum allowable rate under the Criminal Code of $14 per $100 borrowed.” If a lender quotes you more than $14 per $100, that’s a reason to walk out.

What are the rules where you live?

What still differs between the nine is everything except the price.

How much you can borrow. A payday loan is capped at $1,500 and 62 days. On top of that, Ontario (opens in a new tab), British Columbia and Saskatchewan each limit a loan to half your net pay for the period. Manitoba is stricter at 30%.

How long you have to change your mind. Ontario and British Columbia (opens in a new tab) give you two full business days to cancel at no charge. Manitoba gives 48 hours excluding Sundays and holidays, New Brunswick 48 hours with a cancellation form handed to you at signing, and Saskatchewan until the end of the next business day.

Whether you can be sold a second one. Rollovers are banned nearly everywhere, and BC and Saskatchewan allow only one loan at a time. British Columbia goes further. A third loan inside two months has to be repaid over two or three pay periods rather than in one hit. Alberta requires instalments outright, spread over at least 42 days and no more than 62.

What does it cost if you borrow more than once?

The $70 is the price of one loan, and one loan is not what usually happens. British Columbia asks every licensed lender to report its loan data each year and publishes the totals (opens in a new tab). Across the 2025 reporting year, 137,909 British Columbians took out 652,351 payday loans, borrowing $419 million and paying $60.7 million to do it.

That’s 4.7 loans per borrower, and about $440 each in fees over the year. Only 33,306 of those 137,909 people took a single loan. Roughly three in four came back, 46,333 borrowed six times or more, and 4,042 took more than fifteen payday loans in twelve months.

A payday loan doesn’t add money to your month. It moves $500 from your next paycheque into this week, so payday arrives $500 lighter and the same gap opens a few days earlier than last time. That’s what the repeat numbers are measuring.

The strain is showing up in the same data. The share of loan dollars that went into default in BC rose from 13.27% in 2020 to 20.36% in 2025. Lending has also moved online. The 24 licensed online-only locations wrote $218 million of that $419 million, up 65% in a single year, while the number of licensed locations fell to 156 from 194 in 2020. One caution on all of it, which the regulator states itself: lenders report these figures and Consumer Protection BC doesn’t audit them.

What happens if you can’t repay on time?

The lender presents the pre-authorized debit anyway. If it bounces you pay a dishonoured-payment charge, which Ontario caps at $20 and the federal consumer agency puts at a one-time $20, and your bank will usually add an NSF fee of its own on the same day.

After that, interest starts on what’s outstanding. Ontario allows 2.5% a month, non-compounding. Nova Scotia allows up to 30% a year. Neither compares to the original fee, but both keep running for as long as the balance does.

Then it goes to collections, and a collection account sits on your credit file for six years. Only after a creditor sues you and wins a judgment can anything be taken from your pay, which is a slower road than most collection calls suggest. We walk through where those limits sit in wage garnishment in Canada.

What costs less than a payday loan?

Almost everything, which says more about the payday loan than about the alternatives. In rough order of what’s worth trying:

• Ask the biller for a payment arrangement. Utilities, phone carriers, landlords and the CRA all have them, and they usually cost nothing. It’s the option people skip because phoning to say you’re behind is the hard part.
• Overdraft on your chequing account. Usually a few dollars a month plus interest, and far cheaper than $14 per $100 if you clear it quickly.
• A cash advance app. No interest and no credit check, so it beats a payday loan on price every time. It isn’t free either. Tips and express-transfer fees push the real cost into the hundreds of percent, and the repayment lands on your next payday exactly as a payday loan does.
• A small loan from a credit union. Slower, and several run short-term products built specifically to undercut payday lending.
• A credit card cash advance. Interest starts the day you take it, at a higher rate than purchases. Still a fraction of 365%.

So how does a savings app help someone who’s short?

This week, it doesn’t, and pretending otherwise would be no use to anyone. The honest sequence is the bill first and the buffer after.

What breaks the cycle in those BC numbers is a few hundred dollars sitting somewhere for the week the car needs a battery. Building that is slow and gives you nothing to look forward to, which is most of why it doesn’t happen.

Lodavo changes that. It’s free, your money stays in your own bank account, and every $25 sitting in it earns a ticket in a weekly draw. Prizes go up to $10,000, and at least $100 goes to someone every week. It’s the same feeling as a lottery ticket, pointed at a balance that only goes up.

The number to check before you sign

$14 per $100 is the ceiling, and since January 1, 2025 it’s the ceiling in all nine provinces that license payday lending. Anything above it means the lender is either unlicensed or working from a page that hasn’t been updated, and both are worth knowing before you sign. The other number to have in mind is 4.7, because one loan isn’t what the data shows happening.

If you’re reading this ahead of the problem rather than in the middle of it, a few hundred dollars set aside is the whole answer. Lodavo is free on the Apple App Store (opens in a new tab) and the Google Play Store (opens in a new tab), and the savings already sitting in your own account start earning tickets the week you connect it.

This article is general information, not legal or financial advice. Payday rules and maximum charges change, and the ones that apply to you depend on your province. Check the linked regulator before acting on anything here.

Terms and conditions apply. No purchase necessary (alternate method of entry available). Skill-testing question required. Open to legal residents of Canada who are the age of majority. Odds depend on the number of eligible entries received. Full rules and odds at our contest rules.