A payday loan is a loan that you have to pay back out of your next paycheque. The companies that offer these loans require you to prove that you have a steady source of income, usually a job, although some lenders also accept proof that you are receiving government benefits or have another type of income.
Lenders usually let you borrow up to an amount that equals a certain percentage of your next paycheque, generally somewhere between 30 and 50 percent. In return, you have to give the lender either a cheque for the amount of the loan and all of the associated fees (postdated to your next payday) or permission to withdraw the total amount from your bank account on your next payday.
Alternatives to Payday Loans
Payday loans usually cost much more than any other type of loan, so before deciding to get one, think about whether you have cheaper options. Here are some alternatives to consider:
- Credit Card Advance: Obtaining another kind of loan, such as a credit card advance, can be less expensive than payday loans.
- Line of Credit: A line of credit from a bank or credit union usually offers better interest rates and repayment terms.
- Borrowing from Friends or Family: Asking friends or family for help can be a simpler and more affordable solution.
- Delaying Expenses: Finding some way to delay your expenses until you get paid may help you avoid borrowing altogether.
Finding the right loan can be tricky, especially when you’re in a hurry. Instead of jumping at the first offer, it’s smarter to compare your options. For more information, visit a fast money loan comparison resource at https://www.pretargentrapide.ca/. This guide breaks down interest rates, repayment terms, and what to watch out for so you can make a well-informed choice.
Potential Risks of Payday Loans
Payday loans usually cost much more than any other type of loan, so before deciding to get one, think about whether you have cheaper options. Alternatives include obtaining another kind of loan, such as a credit card advance or a line of credit from a bank or credit union, asking friends or family for help, or finding some way to delay your expenses until you get paid.
Payday loans should be your last resort. Because of the high cost, and because you must pay any loan off in full on your next payday, you may find yourself with even deeper money troubles when that time rolls around. After all, once the loan and the fees are paid off, the amount you have to live on for the next pay period will be significantly reduced. This can lead to a cycle in which you once again have to resort to a payday loan.
If you do decide to get a payday loan, read the loan agreement carefully and make sure you understand the true cost of the loan. Lenders often break down the cost into categories such as “interest” and “administration fees”, among others. Regardless of what all of the fees are called, the key is to understand the total amount that the loan will cost you.
Before signing the agreement make sure you understand it and remember to take a copy with you.
Several provinces have passed new legislation to regulate the interest rates of payday loans. Check with your provincial or territorial consumer affairs office to find out whether there are any rules payday lenders have to follow where you live.
Useful Resources and Further Reading
For other information on payday loans, you can also visit the website of the Financial Consumer Agency of Canada (FCAC) and consult their publication “Payday Loans: An Expensive Way to Borrow.”
Financial Consumer Agency of Canada (FCAC)
6th Floor
427 Laurier Avenue West
Ottawa, Ontario K1R 1B9
Telephone: 613-996-5454
Toll Free: 1-866-461-FCAC (3222)
Toll Free 2: 1-866-914-6097
Phone (TTY): 613-947-7771
Fax: 613-941-1436 Email: [email protected]
Website: www.fcac-acfc.gc.ca
Provincial and Territorial Consumer Affairs Offices
Payday loan rules are different in each province. Contact these offices to check legal limits on payday loans, interest rates, repayment terms, and your rights as a borrower.
| Province/Territory | Office Name & Address | Contact Information |
|---|---|---|
| Alberta | Service Alberta, Consumer Contact Centre 3rd Floor Commerce Place 10155-102 Street Edmonton, Alberta T5J 4L4 | Phone: 780-427-4088 Toll Free: 1-877-427-4088 Email: [email protected] Website: www.servicealberta.ca |
| British Columbia | Consumer Protection BC #307-3450 Uptown Blvd PO Box 9244 Victoria, British Columbia V8W 9J2 | Phone: 604-320-1667 Toll Free: 1-888-564-9963 Fax: 250-920-7181 Email: [email protected] Website: www.consumerprotectionbc.ca |
| Manitoba | Consumer Protection Office, Manitoba Justice 302-258 Portage Avenue Winnipeg, Manitoba R3C 0B6 | Phone: 204-945-3800 Toll Free: 1-800-782-0067 Fax: 204-945-0728 Email: [email protected] Website: www.manitoba.ca/consumerinfo |
| New Brunswick | Financial and Consumer Services Commission 225 King Street, Suite 200 Fredericton, New Brunswick E3B 1E1 | Toll Free: 1-866-933-2222 Fax: 506-444-4494 Email: [email protected] |
| Newfoundland and Labrador | Service NL PO Box 8700 St. John’s, Newfoundland and Labrador A1B 4J6 | Phone: 709-729-2600 Toll Free: 1-877-968-2600 Fax: 709-729-6998 Email: [email protected] |
| Northwest Territories | Consumer Affairs, Department of Municipal and Community Affairs 5201-50th Avenue, Suite 600 PO Box 1320 Yellowknife, Northwest Territories X1A 2L9 | Phone: 867-767-9161 ext 21022 Fax: 867-873-0309 Email: [email protected] Website: www.maca.gov.nt.ca/en/services/consumer-affairs |
| Nova Scotia | Service Nova Scotia and Municipal Relations, Public Enquiries Mail Room, 8 South, Maritime Centre 1505 Barrington Street Halifax, Nova Scotia B3J 3K5 | Phone: 902-424-5200 Toll Free: 1-800-670-4357 Fax: 902-424-0720 Email: [email protected] Website: novascotia.ca/sns/access/individuals/consumer-awareness.asp |
| Nunavut | Consumer Affairs, Department of Community and Government Services 3090 – 9th Street P.O. Box 440 Baker Lake, Nunavut X0C 0A0 | Phone: 867-793-3303 Toll Free: 1-866-223-8139 Fax: 867-793-3321 Email: [email protected] Website: www.gov.nu.ca/ |
| Ontario | Consumer Protection Ontario, Ministry of Government and Consumer Services Box 450, 1201 Wilson Ave, Station A Toronto, Ontario M3M 1J8 | Phone: 416-326-8800 Toll Free: 1-800-889-9768 Phone (TTY): 416-229-6086, 1-877-666-6545 Fax: 416-326-8665 Email: [email protected] Website: www.ontario.ca/consumerprotection |
| Prince Edward Island | Consumer Services, Department of Justice and Public Safety Shaw Building, 4th Floor, 95 Rochford Street PO Box 2000 Charlottetown, Prince Edward Island C1A 7N8 | Phone: 902-368-4580, 902-368-4550 Toll Free: 1-800-658-1799 Fax: 902-368-5283 Website: www.princeedwardisland.ca/en/topic/consumer-services |
| Quebec | Office de la protection du consommateur 400 Jean-Lesage Boulevard, Suite 450 Québec, Quebec G1K 8W4 | Phone: 418-643-1484 Toll Free: 1-888-672-2556 Fax: 418-528-0976 Website: www.opc.gouv.qc.ca |
| Yukon | Consumer Services, Department of Community Services 307 Black Street Whitehorse, Yukon Y1A 2N1 | Phone: 867-667-5111 Toll Free: 1-800-661-0408 ext. 5111 Fax: 867-667-3609 Email: [email protected] Website: www.community.gov.yk.ca/consumer/index.html |
| Saskatchewan | Consumer Protection Division, Financial and Consumer Affairs Authority of Saskatchewan Suite 500 – 1919 Saskatchewan Drive Regina, Saskatchewan S4P 4H2 | Phone: 1 877 880-5550, 306 787-5550 Fax: 306 787-9779 Email: [email protected] Website: www.fcaa.gov.sk.ca |
Based on source material: https://ised-isde.canada.ca/site/office-consumer-affairs/en/money-debt-and-giving/payday-lending-find-information-you-need