How Much Does a Payday Loan Cost in Canada? 35% Cap vs $14 per $100

Updated September 25, 2026. Every figure below is dated and linked to its source.

A payday loan in Canada costs up to $14 for every $100 you borrow, so $500 for two weeks costs $70. That works out to about 365% APR. Every other consumer loan is capped at 35% APR, all fees included. At that cap, $500 repaid over three months costs about $29 in interest.

Key facts, September 2026

• Since January 1, 2025, the criminal interest rate is 35% APR, and every fee counts toward it (SOR/2024-114, Canada Gazette).
• Payday loans of up to $1,500 for up to 62 days cost at most $14 per $100 where licensed (FCAC, October 14, 2025).
• Borrowing $300 for 14 days costs $42 as a payday loan, but $5.92 on a line of credit (FCAC).
• Half of payday loan users took out more than one loan, and 30% had trouble repaying on time (FCAC research, September 17, 2025).
• The Bank of Canada held its policy rate at 2.25% on September 2, 2026 (Bank of Canada).

What is the most a small loan can legally cost in Canada?

The legal maximum for almost every consumer loan in Canada is 35% APR, and that limit includes all fees. It comes from section 347 of the Criminal Code. On January 1, 2025, new rules cut the rate from an effective 60% a year to 35% APR. The Canada Gazette notice for the change, SOR/2024-114, explains that 35% APR works out to about 41.2% a year once interest compounds monthly. The key word is "all." Setup fees, brokerage fees, insurance sold with the loan and any other charge count as interest under the law. A lender cannot keep the rate at 34% and then add a $100 "admin fee" on top. If the total cost pushes past 35% APR, the loan breaks the law.

There are a few narrow exceptions, and none of them apply to most people borrowing for a bill. Business loans between $10,000 and $500,000 can charge up to 48% APR. Pawn loans under $1,000 can also reach 48% APR. Payday loans have their own separate cap, which we explain in the next section. For a regular personal or instalment loan of $300 to $1,500, the 35% ceiling is the rule. Our guide to bad credit loans in Canada shows how lenders decide who gets approved under this cap. The short version is that lenders look at your income and bank history. They then price the loan at or below 35%, never above it.

How does the $14 per $100 payday loan rule work?

A payday loan is a special loan that may cost more than 35% APR. In return, it must follow strict rules. It must be $1,500 or less. It must be paid back within 62 days. And it must come from a lender licensed by a province that has its own payday loan law. When those three things are true, the federal rules let the province set the price. Since January 1, 2025, the federal regulation requires that price to be no more than $14 per $100 borrowed. The Financial Consumer Agency of Canada (FCAC) confirms that a dishonoured payment fee is capped at $20 on top of that.

So what does $14 per $100 look like as a yearly rate? If you borrow $100 for 14 days and pay $14, that is 14% for two weeks. Stretch that across a full year and you get about 365% APR. That is more than ten times the 35% cap on other loans. The fee is also fixed, no matter how early you pay. Borrow $500 on Monday and repay it the next Friday, and you still owe $70. That is why a payday loan feels cheap in dollars but costs a lot as a rate. It is built for one short gap, not for a problem that lasts a month or more.

Each province that licenses payday lenders has confirmed the same $14 cap. Alberta, British Columbia, Manitoba and New Brunswick all state it on their own regulator pages. Quebec is different. It has no payday loan law at all, so the 35% APR ceiling applies to every loan there. Quebec's consumer protection office, the OPC, can also refuse a licence to a lender that charges more than 35%. In practice, a two-week payday loan at $14 per $100 cannot legally operate in Quebec.

What does it cost to borrow $300 for two weeks with each option?

The cheapest way to borrow $300 for 14 days costs less than $6, and the most expensive costs $42. The FCAC compared the main choices using the same $300 loan and the same 14 days. We added a fifth row: an instalment loan charged at the full 35% APR cap for the same two weeks. The gap between the top and bottom rows is the whole story of this guide. If you have room on a line of credit or a credit card, use it before you take a payday loan. If you do not, a small instalment loan at or below 35% APR is often the next best option. It also lets you spread payments over a few months instead of one payday.

Sources: the first four figures are from the FCAC payday loans page. The 35% APR row is our own calculation: $300 × 35% × 14 ÷ 365. Your real cost depends on the lender and the term.

Why does a payday loan cost more than it looks?

A payday loan costs more than it looks because the fee repeats every time you borrow again. One $500 loan costs $70. But the full $570 is due on your next payday, and that can leave you short for rent or groceries. Many people then take a new loan to cover the gap. If you repeat that every two weeks for three months, you pay $70 six times, or $420. After all of that, you still owe the original $500. The FCAC found that 50% of payday loan users borrowed more than once. It also found that 30% had trouble repaying on time, and 7% paid one payday loan with another.

Many borrowers do not see this coming. In the same FCAC study, only 25% knew that payday loans cost more than a credit card cash advance. And 88% of payday loan users had no emergency savings. That mix is what makes the loans risky. Money is tight, the fee is high, and there is no cushion if something else goes wrong. Everyday costs are not helping either. Statistics Canada reported that prices rose 3.0% in the year to August 2026. Grocery prices are up 29.0% since August 2021. Our guide to car repair loans with bad credit shows how this plays out with one common emergency bill.

How to check the true cost of any loan offer in 6 steps

You can check any offer in about five minutes if you look at the right numbers. Canadian law makes lenders show you the total cost before you sign. Here is how to use that.

1. Find the cost of borrowing box. The FCAC says lenders must show the loan amount, the interest rate, the term, the payment amount and all other fees. In Ontario, a payday lender must put the amount, the term in days and the total cost on the first page.
2. Check the APR. For any loan that is not a payday loan, the APR must be 35% or lower, all fees included. Anything higher is illegal.
3. Check the payday fee. For a payday loan, divide the total cost by the amount borrowed. It must be $14 per $100 or less.
4. Add up every payment. Multiply the payment by the number of payments. Subtract the amount you borrowed. That is your real cost in dollars.
5. Compare more than one offer. Apply once with Loan Boys in under 6 minutes. Several lenders see one application, with no hard credit pull. That is why approval rates are high. You can then compare the offers side by side.
6. Match the dates to your payday. Set each payment for the day after you are paid. This helps you avoid NSF fees.

Loan Boys is a matching service, not a lender. It serves Ontario, Alberta, British Columbia, Manitoba, Saskatchewan, Nova Scotia, New Brunswick and Newfoundland and Labrador. You must be 18 or older, live in Canada and have a regular income. Decisions usually come in minutes during business hours, and funds arrive by Interac e-Transfer.

What does a small loan really cost at 35% APR? Real examples

At the 35% legal maximum, $500 over three months costs about $29 in interest, and $1,000 over six months costs about $105. Here is the math. First, divide 35% by 12 to get the monthly rate, about 2.92%. Then use the standard loan formula: payment = P × r ÷ (1 − (1 + r)⁻ⁿ). P is the amount you borrow, r is the monthly rate and n is the number of months. The table below shows the result for common amounts. These are the most a lender can charge. Many offers come in lower, so treat these as the worst case.

Look at the $500 rows. A payday loan costs $70 for two weeks. An instalment loan at the legal maximum costs $29.45 over three months, or $52.26 over six. You also pay it back in smaller pieces, about $176 or $92 a month, instead of $570 in one go. There is a trade-off. A longer loan costs more in total, even though each payment is smaller. So pick the shortest term whose payment still fits your budget. And if you can pay early without a penalty, do it. The FCAC notes that many lenders allow early repayment, but some charge a fee, so ask first.

Your rights, and 5 costly mistakes to avoid

Your province adds rules on top of the federal caps, and they can save you money. Ontario has the most detailed rules. A payday lender there cannot lend more than 50% of your net pay. You can cancel within two business days, with no penalty and no reason needed. A bounced payment fee is capped at $20. If you fall behind, default interest is capped at 2.5% a month, not compounded. And if you take three loans in 63 days, the lender must offer you an extended payment plan. Manitoba gives you 48 hours to cancel. New Brunswick limits a payday loan to 30% of your net pay, up to $1,500. Check your own regulator for the full list.

1. Looking at the fee, not the rate. $14 sounds small. As a yearly rate, it is about 365%.
2. Rolling one loan into the next. Six back-to-back $500 payday loans cost $420 in fees. Ontario bans a second loan from the same lender until the first is repaid.
3. Missing the cancellation window. If you find a cheaper option the next day, cancel. Ontario gives two business days, Manitoba 48 hours.
4. Using an unlicensed or offshore lender. The FCAC warns about online lenders outside Canada. Check your province's licence registry before you sign.
5. Borrowing more than you need. Every extra $100 at 35% APR costs up to about $10 over six months. Take only what the bill needs.

What next: how to pay less the next time

The cheapest loan is the one you never need, so build a small cushion once this bill is paid. Start with whatever amount you were paying on the loan. When the loan ends, keep sending that amount to a separate savings account. Three months of $92 is almost $280, which covers many small emergencies. The FCAC found that 88% of payday loan users had no emergency savings. Even a few hundred dollars puts you ahead of that. Next, look at costs you can plan for, like dental work or car care. Our guide on what to do with no money for the dentist covers payment plans and low-cost clinics.

Your credit score also shapes what you pay. Banks offer lines of credit near the $5.92 end of the FCAC table, but they usually want good credit. Pay every instalment on time, since payment history matters most to your score. Ask your lender whether it reports to Equifax or TransUnion. If it does not, a secured credit card can help you build a record. Equifax Canada reports that the average consumer held $22,699 in non-mortgage debt in the second quarter of 2026. Keeping your own balances low helps your score and your budget.

Related questions

Is a payday loan legal if it costs more than 35%?
Yes, if it meets all the rules. It must be $1,500 or less and last 62 days or less. It must come from a licensed lender and cost no more than $14 per $100.

What is the cheapest way to borrow $500?
An existing line of credit or credit card is usually cheapest. Without one, a $500 instalment loan at 35% APR costs about $29 over three months.

Can a lender charge fees on top of 35% APR?
No. Under the Criminal Code, all fees, charges and interest count toward the 35% cap.

Are payday loans available in Quebec?
No. Quebec has no payday loan law, so every loan there must stay at or below 35% APR.

Sources

• Canada Gazette, Criminal Interest Rate Regulations, SOR/2024-114 (June 19, 2024)
• Financial Consumer Agency of Canada, Payday loans (modified October 14, 2025)
• Financial Consumer Agency of Canada, Personal loans (modified October 14, 2025)
• Financial Consumer Agency of Canada, Understanding payday loan use and perspectives (September 17, 2025)
• Financial Consumer Agency of Canada, Payday loans: market trends (updated September 17, 2025)
• Government of Ontario, Payday loans: your rights (December 31, 2024)
• Government of Alberta, Payday loans (December 16, 2024)
• Consumer Protection BC, Payday loans (May 26, 2026)
• Manitoba Consumer Protection Office, Payday loan regulations
• New Brunswick Financial and Consumer Services Commission, Payday loans
• Bank of Canada, Policy rate announcement (September 2, 2026)
• Equifax Canada, Q2 2026 consumer credit trends (August 24, 2026)
• Retail Insider, reporting Statistics Canada's August 2026 CPI (September 14, 2026)
• Smarter Loans, Quebec payday loan rules (reviewed September 2026)