Payday Loans: Do You Know What You Signed Up For?

A Payday loan is:

  • usually a small value loan taken out for a short time, typically until your next payday
  • loaned at a retail store or online
  • the most expensive consumer loan in Ontario
  • an unsecured loan (you cannot put any property as collateral or guarantee for the loan, you need to provide the lender with a post-dated cheque or a pre-authorized debit)

Most lenders do not do credit checks before issuing payday loans. They usually ask borrowers to:

Most lenders do not do credit checks before issuing payday loans. They usually ask borrowers to:

  • prove 3 months of continuous employment
  • give proof of address (e.g., they can ask to see a utility bill)
  • have a chequing account


Payday loans are an expensive form of credit. Before getting a payday loan, you should consider other ways to borrow money (e.g., from family or friends, a bank or credit union or your credit card).

Payday lenders can charge you up to $21 for every $100 that you borrow, this means:

If you borrow $300 for 2 weeks: Payday loan (fee) Credit card (fee with interest at 23%)
1 loan will cost $63 $2.65
2 loans will cost $126 $5.29
4 loans will cost $252 $10.59
6 loans will cost $378 $15.88

The law

The Payday Loans Act helps protect people who take out payday loans.

Under the act:

  • you can’t be charged more than $21 for every $100 that you borrow
  • you can’t be sold or offered any goods or services other than the payday loan
  • you have 2 business days to cancel a contract for a payday loan without  any penalty (e.g., paying a fee) and without having to give a reason
  • “rollover” loans are not allowed (this means you can’t roll what you owe on a payday loan into a second payday loan. This is because you can’t get another payday loan from the same lender before paying your first loan in full)

Proposed changes to strengthen consumer financial protection

Ontario has introduced new legislation that will increase protections for consumers who use high-cost alternative financial services, such as payday loans, rent-to-own services, high-cost instalment loans and services to cash government issued cheques. This legislation will also better protect those with debts in collection.

Learn more about the proposed legislation

Rules for payday lenders

Payday lenders must:

  • be licensed with the Government of Ontario and follow the rules set by the Payday Loans Act
  • include specific information on the first page of your contract
    • the amount you are borrowing
    • the number of days that your loan is for
    • what you will pay to borrow the money
  • never ask for or accept payment by automatic deduction from your paycheck (assignment of wages )
  • display a poster and give out a flyer that explain the cost of taking out a payday loan over time

A lender can’t:

  • contact you more than 3 times a week (not including regular mail) or on holidays
  • contact your spouse, family, household members, relatives, friends,  neighbours, or acquaintances at any time
  • process a post-dated cheque or pre-authorized debit more than once if it will result in your financial institution charging you any fees, like overdraft or fees for insufficient funds (if a lender does this, you are entitled to recover these fees from the lender and would not pay the cost of borrowing the loan)
  • use threatening or intimidating language
  • use excessive or unreasonable pressure

File a complaint

If you believe that a payday lender has broken the rules, you can file a complaint with us.

Find a licensed lender

Before you get a payday loan:

  • always check that a lender is licensed (don’t take out a loan unless you see an Ontario license number, even if borrowing from retail stores or online lenders)
  • be aware that there are companies that pose as online payday lenders but are actually “lead generators” that collect personal information from people looking to get a payday loan and then sell it to an actual payday lender (sharing this kind of information can put you at risk of identity theft)

Check if a payday lender is licensed

Repayment plan

Before you take out a payday loan, make sure to:

  • plan to have enough money in your account to repay the loan and on the day it is due
  • understand how much you will pay for the loan if it’s overdue

Ask the right questions

Before you get a pay day loan, you should ask:

  • how much will it cost me to borrow this money?
  • how much will I be charged if I don’t pay the loan back on time?
  • is this payday lender licensed and in good standing?
  • am I being charged more than $21 for every $100 that I’m borrowing

Fast Access Financial is NOT a payday loan company. What’s the difference; lower rates, longer terms, no hidden fees, and open repayment policies among countless other benefits that should make saying, “NO” to payday loan companies, a NO brainer. We provide alternative financing across Ontario to those who’ve been turned down for failure to meet the requirements of larger institutions and/or bank loans. Our goal isn’t to trap you in an endless cycle of paycheck to paycheck survival. It is to help you get the money you need as quickly as possible with a safe, affordable payment plan that won’t disrupt your lifestyle. Most importantly, we report your progress to Equifax to help repair your credit so you can get you back on track and head towards a brighter financial future. Make the smarter choice.

Fast Access Finance
Phone 1.855.367.9191