In Canada, a payday loan may cost no more than $14 for every $100 you borrow, under federal rules that took effect with the Criminal Interest Rate Regulations. The same rules cap the loan at $1,500, limit the term to 62 days, and allow a dishonoured-payment fee of no more than $20. Provinces that license payday lenders set their own caps and conditions on top of that federal floor, which is why the exact rules you face depend on where you live.
How the Cap Works in Practice
The cap is a fee, not an interest rate. If you borrow $300, the maximum fee is $42. If you borrow $500, it is $70. The fee covers the whole cost of the loan for the term, and the lender cannot charge interest on top of it. Because the fee is fixed and the term is short, the effective annual rate is still very high, but the dollar amount is capped and predictable.
| Amount borrowed | Maximum fee at $14 per $100 | Total to repay |
|---|---|---|
| $100 | $14 | $114 |
| $300 | $42 | $342 |
| $500 | $70 | $570 |
| $1,000 | $140 | $1,140 |
| $1,500 | $210 | $1,710 |
The table is illustrative and shows the federal ceiling. A province with its own payday regime may set a different cap, and a lender may charge less than the maximum. Always confirm the current rules in your province before you borrow.
The Other Limits in the Same Rules
- $1,500 maximum. A single payday loan cannot exceed this amount.
- 62-day maximum term. The loan must be repaid within 62 days.
- $20 dishonoured-payment fee cap. If a pre-authorized debit fails, the fee is limited.
- No interest on top. The fee is the cost, and interest cannot be charged separately.
Provincial Layers on Top
Payday lending is regulated provincially, and nine provinces have their own regimes. These regimes set licensing requirements, fee caps, cooling-off periods, and rules on renewals. Quebec effectively bans payday loans. That means a borrower in one province may have stronger protections than a borrower in another, and a lender licensed in one province is not automatically licensed in the next. Before you borrow, confirm the lender holds a licence in your province and check the cap that applies where you live.
Why the Cap Matters to You
A cap does not make a payday loan cheap. It limits how much a lender can charge, but the annualized cost is still far above a personal loan, a credit card cash advance, or a line of credit. The Financial Consumer Agency of Canada compared the cost of borrowing $300 for 14 days: a payday loan cost about $42 to $63, a credit card cash advance about $4 to $8, overdraft about $2.40 to $7, and a line of credit about $1.15 to $5.81. The cap protects you from the worst fees, but it does not make the product low cost.
Your Rights Under the Rules
- You are entitled to a written agreement that states the fee and the repayment date.
- You can cancel within the cooling-off period your province allows and get the fee back.
- The lender cannot charge more than the provincial cap.
- If you cannot repay on time, ask about an extended repayment plan.
- Report a lender that ignores the cap to your provincial consumer protection office.
What Happens If a Lender Breaks the Cap
A lender that charges above the cap or operates without a licence is breaking the law, and you may be able to challenge the debt. Provincial regulators can fine or shut down unlicensed lenders, and a court may find the offending charges unenforceable. If you are asked to pay more than the cap, do not agree to a new loan to cover the old one. Record what you were charged, keep the agreement, and report the lender to your provincial consumer protection office. The sooner you raise it, the better your chance of a remedy.
Sources and further reading
- Financial Consumer Agency of Canada: Payday loans, for the fee cap and the cost comparison.
- Criminal Interest Rate Regulations (SOR/2024-114), the source of the $14 per $100 cap, the $1,500 limit, and the 62-day term.
This is general information, not financial advice. Instalment.ca is a loan matching and comparison service, not a lender and not a financial advisor. All loan terms, rates, and fees are set by individual licensed lenders and are subject to credit approval.