There’s no telling what life can thrust in your direction. It could be a car accident, pipes bursting in your home, or you’ve hit a rough patch and need money for rent, food, insurance, and one of your many other financial obligations.
The fact is, you need money now.
You don’t require a boatload of cash—just enough to cover you until your next payday. Moreover, you want a loan procurement process that’s hassle-free.
Your circumstances have you considering a payday loan. After all, you’d likely get approved for quick cash ASAP (without a credit check), cover yourself for a couple of weeks, square up, and then move on with your life.
While payday loans can help you in a pinch, all financial decisions—especially pertaining to loans—should be informed choices.
One facet of this topic you should research in depth is the payday loan interest rates Canada lenders offer nationwide. After all, each province and territory does things its own way.
We’ll delve into payday loan rates across Canada and the many nuances involved throughout this article.
The Basics Of Payday Loans
Payday loans can be a lifesaver when you’re in a financial bind or emergency and have a short-term financial stopgap to fill.
A $1,500 maximum exists with payday loans, and you’ll have up to 62 days to pay it off. However, the idea is to pay it off by your next paycheque to prevent additional charges or fees.
Payday loans take an average of 14 to 28 days to pay off. There’s no credit check, and the interest rates and fees are higher than standard loans.
Given payday loans’ streamlined, emergency nature, they differ from traditional loans in many ways (which we’ll explore later). They’re also different across all Canadian provinces and territories—there isn’t a general national cap on rates and fees.
Explaining APR (Annual Percentage Rate)
APR is the annual percentage rate—the yearly interest of the amount paid to investors or charged to borrowers.
Shown as a percentage, APR is the annual cost of funds over a loan term or investment-generated income, such as transaction fees or additional costs. The purpose of the APR is to give consumers a comparison or reference point—a bottom-line amount—to weigh against investment products, credit cards, lenders, etc.
Truth in Lending Act regulations dictate that lenders disclose specific charges to customers. The APR is part of these laws and must be clearly stated before you take out a loan.
Here’s how APR is calculated:
- Calculate the loan’s total interest charges.
- Add the fees and divide the result by the principal balance.
- Divide the sum by the number of loan term days and multiply by 365.
- Multiply by 100.
Interest Rates For Payday Loans
Provincially, in Canada, interest rates differ. Thus, your research and understanding of interest rates must be specific to where you live. Fortunately, Loan Express provides seamless payday loan access to every province outside of Quebec and PEI. Aside from these two exceptions, you can come to us for quick emergency funds no matter where you live in Canada.
We’ve got the whole country covered, adhering to rate regulations province-by-province.
Disclaimer: Our examples below refer to 14-day loan repayment terms. Thus, all calculations will apply to those terms and not anything exceeding them. Also, be aware that APR applies to an entire year’s interest. Payday loans are meant to have brief terms and won’t accumulate to those sky-high levels.
Payday Interest Rates In Ontario
The maximum APR in Ontario is 391.07%. The most you could be charged for $100 is $15. If you take out a $1,500 loan—the maximum—the most you’ll have to pay back is $1,725 for a 14-day loan.
Payday Interest Rates In Quebec
In Quebec, payday lenders can only charge up to 35%.
Payday Interest Rates In BC
BC’s maximum rates mirror Ontario’s at 391.07% or $15 per $100 borrowed. Thus, you must pay back up to $1,725 if you take out the maximum of $1,500. Say you take out a smaller amount, though, such as $300. In this instance, you would have to pay back $345.
Payday Interest Rates In Alberta
The APR in Alberta is also 391.07%, yielding a $15 per $100 borrowed limit. Again, you’ll pay back—at most—$1,725 for a $1,500 payday loan with a 14-day term. Provided you take out $500 over that same period, you’ll owe $575 at most.
Payday Interest Rates In Manitoba
Manitoba’s APR is 443.21%, amounting to $17 per $100 borrowed. You’ll have to pay back $1,755 for a $1,500 14-day loan and $819 for a $700 payday loan of the same length.
Payday Interest Rates In Saskatchewan
Saskatchewan equals Manitoba, charging $17 per $100, equalling 443.21%. Thus, you’ll owe $1,755 for a $1,500 14-day loan or $1,170 on a $1,000 payday loan of the same term.
Payday Interest Rates In The Maritimes
We’ll break down the Maritime payday interest rates in bullet points below:
- New Brunswick lets payday lenders charge a maximum rate of $15 per $100, equaling a 391.07% APR.
- Newfoundland & Labrador allows a rate of $21 per $100 of payday loans, amounting to 547.50%. You’d have to pay back $1,815 for a 14-day $1,500 payday loan at this rate.
- Nova Scotia allows a maximum payday loan rate of $19 per $100 borrowed—495.36% APR. A 14-day payday loan of $1,500 will yield a maximum $1,785 payback amount.
- Prince Edward Island has a maximum payday loan interest rate of $25 per $100 borrowed or a 651.79% APR. You’ll owe back $1,875 for a $1,500 loan with a 14-day term.
Payday Interest Rates In The Territories
The maximum interest rate for payday loans in the territories (Nunavut, Yukon, and the Northwest Territories) is 60%.
Comparison With Traditional Loans
The primary differences between payday loans and traditional loans start with the length of their terms. A payday loan has a 62-day maximum term, whereas conventional loans from a bank can often have a 3 to 10-year term. Taking our examples a step further, soon-to-be homeowners frequently take out mortgages for up to 25 years (or even more).
Payday loans are for quick cash to help you get out of a bind, and—unlike standard loans—don’t call for credit checks. You’ll also pay a flat interest fee when you’re on time paying off a payday loan, which differs from standard options.
Unlike personal or bank loans, payday lenders base repayments on your paycheque schedule.
Payday loans charge higher interest than other loan types because of how short the terms are supposed to be. They’re a quick-fix solution for smaller, affordable amounts—so rates will be higher than loans meant to last ten years.
How To Compare Rates And Choose The Best Option
While we’ve mentioned the maximum payday loan APR and interest in each province, that doesn’t address how not all payday lenders charge the maximum APR. You can find more favourable rates than the maximum throughout your province, but it’ll require patience and focus. Visit websites, peruse the offerings, and email (or make phone calls) to inquire about rates and fees. Then, compare what you find.
Payday lenders you can trust will be prompt and upfront with responses. Lenders can’t charge hidden fees in Canada. It’s illegal to do so. They also must disclose all loan costs clearly so you have all the information.
You can ask any payday lender you encounter for their APR (or cost per $100 borrowed for a more relevant comparison). They’re forced to provide answers by law. If a lender fails on these fronts, don’t apply for a loan with them. Additionally, quick approval is something else you should prioritize in finding the ideal payday lender.
It should only take one to two business days at most for a deposit to go through. You need fast cash, so funds should be delivered promptly.
Loan Express offers instant online loans with quick and easy access across Canada (other than in Quebec and PEI), whether in the dense city or the sparsest, most remote location.
Our rates are reasonable, our practices honourable, and you can benefit from our 24/7 application process.
We’re transparent about all fees—there’ll be no surprises with Loan Express.
We only approve amounts you can repay, ensuring you don’t incur sneaky additional charges. We put the customer’s needs and financial well-being first and foremost!
Dealing with a financial emergency and need money now? Apply for a payday loan from Loan Express today and get approved in minutes!
Responsible Borrowing And Avoiding Black Market Lenders
Succeeding with your payday loan means borrowing responsibly. Doing so entails performing due diligence to obtain the best possible rate and having a plan to ensure you make your payments on time. Most importantly, avoid black-market predatory lenders. One sign that you’re dealing with an unsavoury payday lender is if they won’t disclose their rates. Run for the hills if they aren’t transparent.
Legitimate payday lenders will be licensed and must be able to show that licensing to you. However, if you’re unsure about a payday lender’s legitimacy, visit the Government of Canada’s Consumer Hub on their website. Provinces might have online registries to verify a payday lender’s licensing.
Alternatives To Payday Loans
A typical alternative to a payday loan is taking out a credit card cash advance. In the above instance, you obtain cash by borrowing against your credit card. While credit card cash advances can be a convenient, hassle-free option, there are often stringent limits on how much money you can procure. Also, you need a credit card, which not everybody has or can get.
Another option is a personal loan. You’ll notice how these are available all over the internet with quick, near-immediate approvals with terms lasting up to seven years. A problem with personal loans is the requirement for a credit check, unlike with payday loans. Not everyone needing emergency cash has good enough credit to withstand such scrutiny.
Even “bad credit” personal loans require credit checks, and it’s possible to have your application rejected based on having an adverse credit history.
Payday Loan Rates FAQs
Below are questions we’re frequently asked about payday loans and the associated rates.
Are payday loans legal in Canada?
Payday loans are legal in Canada under the Criminal Code section 347.1.
How is the interest rate on a payday loan calculated?
Payday loans use APR (annual percentage interest rate) to convey interest rates. This percentage is determined by dividing the interest paid (or due) by how much is borrowed. Multiply that amount by 365. Then, divide the result by the intended repayment term before multiplying by 100.
What is the average interest rate percentage on a payday loan?
Nationally, a payday loan’s average annual interest rate is 442%, amounting to $17 per $100 borrowed, according to Canada.ca.
What is the maximum interest rate allowed by law in Canada?
The maximum payday interest rate permitted by law in Canada varies by province. Refer to our content above for the maximum payday interest rates per province.
What is a typical APR for a payday loan?
A typical APR for a payday loan in Canada with a 14-day repayment term is 391%.
What happens if you don’t pay back a payday loan in Canada?
Failing to repay a payday loan in Canada comes with numerous consequences, from financial to legal. The additional fees and charges for missed payments can be exorbitant, putting you further into a hole you’ll struggle to dig out of. Your debt could be sold to a collection agency that can take legal action and send your credit score spiralling.
That’s why Loan Express only lends out amounts you can afford and won’t struggle to repay. We want to help you, not send you into an endless cycle of debt.