Payday loans in Canada: the 2026 rules

Updated 2026-10-29 · We are not a lender. Free referral service.

Canada overhauled its high-cost lending rules in 2025. If you are thinking about a payday loan in 2026, the numbers you may remember from a few years ago, like $15 or $17 per $100, are out of date. Here is how the system works now.

Two federal limits that matter

1. The criminal interest rate: 35% APR

Section 347 of the Criminal Code makes it an offence to lend at a “criminal rate.” Since January 1, 2025, that rate is 35% per year, expressed as an annual percentage rate (APR). Before, it was 60% effective annual rate, a formula that allowed much higher charges. The cost of borrowing includes interest and most fees.

2. The payday loan exemption: $14 per $100

Section 347.1 exempts payday loans from the criminal rate if:

• the loan is $1,500 or less;
• the term is 62 days or less;
• the lender is licensed in a province the federal government has designated because it regulates payday lending.

Since January 1, 2025, the total cost of such loans is capped federally at $14 per $100 borrowed. Provinces can set the same limit or a lower one.

What $14 per $100 really costs

APR = cost ÷ amount × 365 ÷ days. A fixed $14 per $100 on a two-week loan equals roughly 365% a year. Try your own numbers in the calculator.

Province by province

Most provinces with payday legislation (including Ontario, British Columbia, Nova Scotia and Manitoba) are designated and license payday lenders. Each adds its own rules on top of the federal cap, such as cooling-off periods, limits on loan size relative to income, and bans on rollovers. See our pages for Ontario, BC, Nova Scotia and Manitoba.

Québec is the main exception: it never sought designation, so all loans there are capped at 35% APR and lenders need an OPC licence. Read our French guide, Prêt sur salaire au Québec.

Alberta has its own regime, but our service is not available there.

Your rights as a borrower

• A written agreement showing the amount, total cost, APR or cost per $100, and due date.
• In many provinces, the right to cancel within a short period (often two business days) without cost.
• No lender can lawfully charge more than the provincial or federal maximum.
• Protection from abusive collection practices under provincial law.

Red flags

• Upfront fees before you get the money: a classic scam.
• No provincial licence number on the website or contract.
• “Guaranteed approval” or “no refusal” claims.
• Offers to roll your loan into a new one with new fees.

Is a payday loan the right move?

Payday loans are designed for one short gap until payday. If you are borrowing to cover regular bills or another loan, a cheaper option will usually serve you better. Our alternatives guide lists the main ones.

Step by step: checking a payday offer

1. Confirm your province and that the lender is licensed there.
2. Check the amount is $1,500 or less and the term 62 days or less; otherwise the 35% APR cap applies.
3. Multiply the amount by 0.14: the cost must not exceed that figure (or a lower provincial limit).
4. Read the due date and make sure it falls after your payday.
5. Note your cancellation window and the default fee.

Instalment loans vs. payday loans

Many lenders now offer instalment loans of a few hundred to a few thousand dollars, repaid over months. They aren’t covered by the payday exemption, so the 35% APR cap applies. Over a short period they often cost less than a payday loan; over a long period the total dollar cost can be higher even though the rate is lower. Compare total repaid, not just the rate.