Updated October 15, 2026. Every figure below is dated and linked to its source.
Short answer: Under Ontario's payday loan rules in 2026, a payday loan can cost no more than $14 per $100 borrowed, so $500 for two weeks costs at most $70. Each loan is capped at 50% of your net pay. You can cancel within two business days, and a bounced-payment fee is capped at $20.
Key facts, October 2026
- A payday loan in Ontario can cost no more than $14 per $100 borrowed, according to the Government of Ontario (2024).
- The Financial Consumer Agency of Canada (FCAC) reports that a payday loan must be $1,500 or less and repaid within 62 days (FCAC, 2025).
- Since January 1, 2025, every other consumer loan in Canada is capped at 35% APR, all fees included (Canada Gazette, SOR/2024-114).
- The FCAC found in 2025 that 50% of payday loan users borrowed more than once and 30% had trouble repaying on time (FCAC research, 2025).
- Toronto caps payday loan stores at 212 licences citywide and is not accepting new applications, according to the City of Toronto (2026).
Definition. A payday loan in Ontario is a short-term loan of $1,500 or less, due within 62 days, from a lender licensed under the Payday Loans Act, 2008, costing at most $14 per $100.
What are the payday loan rules in Ontario in 2026?
Ontario's payday loan rules cap the cost at $14 per $100 borrowed and require every lender to hold an Ontario licence. The rules come from the Payday Loans Act, 2008. Consumer Protection Ontario, part of the Ministry of Public and Business Service Delivery and Procurement, licenses lenders and enforces the law. The Government of Ontario's page on payday loan rights confirms the $14 cap, which matches the federal limit in force since January 1, 2025. The rules cover storefront and online lenders alike.
Payday loans are the one big exception to Canada's 35% APR limit. Section 347 of the Criminal Code sets the criminal interest rate at 35% APR for agreements made since January 1, 2025. The Criminal Interest Rate Regulations (SOR/2024-114) let a province set a higher price for payday loans, as long as it stays at or below $14 per $100. A payday loan only qualifies if it is $1,500 or less and lasts 62 days or less. Any other loan, including an instalment loan, must stay at or below 35% APR with all fees counted. Our guide on how much a payday loan costs in Canada explains the federal side in more detail.
A fee of $14 per $100 sounds small, but it is a very high rate. Borrowing $100 for 14 days and paying $14 equals about 365% APR, as the FCAC notes on its payday loan page. Since July 1, 2018, Ontario lenders must show that APR in ads and agreements, according to the Government of Ontario. The first page of the agreement must also show the amount borrowed, the number of days, and the total cost of borrowing in dollars.
How much can you borrow from a payday lender in Ontario?
An Ontario payday lender cannot lend you more than 50% of your net pay for a single loan. Net pay means what lands in your bank account after tax and deductions. This limit has applied since July 1, 2018, according to the Government of Ontario. The federal ceiling of $1,500 also applies, so the real limit is whichever number is lower. If your net pay is $1,200 per pay period, the most a lender can offer is $600. If your net pay is $4,000 a month, the federal limit of $1,500 still applies.
Here is a real-world example with Ontario's new minimum wage. The general minimum wage rose to $17.95 an hour on October 1, 2026, up from $17.60, as reported by the employment law firm Hicks Morley (2026). Working 80 hours over two weeks at that rate pays $1,436 before deductions. Take-home pay will be lower after tax, CPP and EI. So a full-time minimum-wage worker can borrow less than $718 from a payday lender in one loan. That $718 would cost up to $100.52 in fees at $14 per $100.
Ontario also limits how many loans you can stack with the same lender. A lender cannot give you a second payday loan until the first one is paid in full. Rollovers are banned, so a lender cannot roll an unpaid loan into a new one with new fees. These limits apply lender by lender, so a different licensed lender may still say yes. That is how many people end up with several payday loans at once.
Ontario payday loan rules at a glance
The table below compares each main Ontario payday loan rule with what it means for you when you borrow. All rules come from the Government of Ontario's payday loan rights page, last updated December 31, 2024, unless another source is named.
| Ontario rule | What the law says | What it means for you |
|---|---|---|
| Maximum cost | $14 per $100 borrowed | $500 for two weeks costs at most $70. |
| Maximum loan | 50% of your net pay, and never more than $1,500 (FCAC) | With $1,200 net pay, you can borrow up to $600. |
| Cancellation | Two business days, no fee and no reason needed | Return the money and the loan ends at no cost. |
| Bounced payment fee | $20 maximum since January 1, 2025 | A lender can charge it only once per dishonoured payment. |
| Default interest | 2.5% a month, not compounded, on the unpaid principal | On $500 unpaid, that is up to $12.50 a month. |
| Extended payment plan | Required after 3 loans in 63 days | You repay over at least 3 pay periods if paid weekly, bi-weekly or semi-monthly. |
| Rollovers | Banned, and no second loan from the same lender until the first is repaid | A lender cannot stack new fees on an unpaid loan. |
| Collection contact | No more than 3 times a week if you are in default, never on holidays | Lenders cannot contact your family, friends, neighbours or acquaintances. |
What happens if you can't repay a payday loan in Ontario?
If you miss a payday loan payment in Ontario, the lender can charge one $20 fee for the bounced payment and default interest of up to 2.5% a month. That interest is simple, not compounded, and applies only to the unpaid principal, according to the Government of Ontario. A lender cannot run your pre-authorized debit or cheque a second time if the first try caused bank fees. If it does, you can recover those bank fees from the lender. Call the lender before the due date if you know you will be short.
The extended payment plan is the most useful Ontario rule for borrowers who keep coming back. If you take out three payday loans within 63 days, the lender must offer you an extended payment plan on the third loan. If you are paid weekly, bi-weekly or semi-monthly, you repay over at least three pay periods. No single instalment can be more than 35% of the loan plus the cost of borrowing. On a $500 loan costing $70, that means no instalment above $199.50. If you are paid monthly, you get at least two pay periods, with each instalment capped at 50%. You can pay the plan off early at any time without a fee.
Once you are in default, a payday lender may contact you no more than three times a week, not counting regular mail, and never on a holiday. It cannot contact your spouse, family, friends, neighbours or acquaintances about the debt. It also cannot use threats or excessive pressure. If a debt goes unpaid, a lender may sue in Small Claims Court. Ontario raised that court's limit to $50,000 on October 1, 2025, according to the lawyers' insurer LAWPRO (2025). Licensed insolvency trustee Hoyes, Michalos & Associates notes that the Limitations Act, 2002 generally gives a creditor two years to start a lawsuit on an unsecured debt in Ontario.
An unpaid payday loan can reach your credit report if it goes to a collection agency. Not paying is a civil matter, not a crime, so you cannot be jailed for it. A court judgment can still lead to garnishment of your wages or bank account, so ask for the extended payment plan or see a non-profit credit counsellor early.
How to borrow safely in Ontario: 7 steps
You can protect yourself on any short-term loan in Ontario by checking the licence, the cost and the payment dates before you sign. Loan Boys is a Canadian loan-matching service: one short application is reviewed by several lenders, with no hard credit check and repayment over 3 to 6 months.
- Check the lender's Ontario licence. Every payday lender serving Ontario must be licensed by the province. Steps to Justice, run by Community Legal Education Ontario (CLEO), explains how to search the Consumer Protection Ontario licence tool by name. If the lender is not listed, do not borrow.
- Find out who you are dealing with. The Government of Ontario warns about lead generators that pose as lenders and sell your personal information. Any service you use should say plainly whether it is a lender or not.
- Read the first page of the agreement. It must show the amount, the number of days and the total cost in dollars. It must also show the APR.
- Do the $14 test. Divide the total cost by the amount borrowed and multiply by 100. For a payday loan, the result must be $14 or less.
- Compare an instalment loan. Start your application to see offers from several lenders, with no hard credit pull. That is why approval rates are high. Decisions usually come in minutes during business hours, and funds arrive by Interac e-Transfer.
- Set payments the day after payday. This lowers the risk of a $20 bounced-payment fee.
- Keep your cancellation window in mind. If you find a cheaper option within two business days, cancel the payday loan and return the money.
Loan Boys is not a lender. It serves Ontario, Alberta, British Columbia, Manitoba, Saskatchewan, Nova Scotia, New Brunswick and Newfoundland and Labrador, for applicants 18 or older with a regular income.
What does a payday loan cost in Ontario compared with a 35% APR loan?
A $500 payday loan in Ontario costs up to $70 for two weeks, while a $500 instalment loan at the 35% APR legal maximum costs $29.45 in interest over three months. We calculated the table below on October 15, 2026. It compares the maximum payday loan fee in Ontario with an instalment loan at the 35% APR ceiling. Assumptions: equal monthly payments, monthly rate of 0.35 ÷ 12, no other fees, and the formula payment = P × r ÷ (1 − (1 + r)−n). These are worst-case legal maximums.
| Amount borrowed | Ontario payday loan, 2 weeks (max fee) | 35% APR over 3 months: payment and total interest | 35% APR over 6 months: payment and total interest |
|---|---|---|---|
| $300 | $42.00 | $105.89 a month, $17.67 interest | $55.23 a month, $31.36 interest |
| $500 | $70.00 | $176.48 a month, $29.45 interest | $92.04 a month, $52.26 interest |
| $1,000 | $140.00 | $352.96 a month, $58.89 interest | $184.09 a month, $104.53 interest |
| $1,500 | $210.00 | $529.45 a month, $88.34 interest | $276.13 a month, $156.79 interest |
The payday loan fee buys only two weeks, and the full amount plus the fee is due on one payday. Six back-to-back $500 payday loans cost $420 in fees, and you still owe the $500. A longer instalment term lowers each payment but raises total interest, so pick the shortest term your budget can handle. The FCAC found in 2025 that only 25% of payday loan users knew a payday loan costs more than a credit card cash advance.
Bank borrowing is still the cheapest option if you can get it. The FCAC (2025) priced a $300 loan for 14 days at $5.92 on a line of credit, $7.42 on overdraft protection and $7.65 as a credit card cash advance. The same loan costs $42 as a payday loan. The Bank of Canada held its policy rate at 2.25% on September 2, 2026, but payday loan prices do not follow that rate.
Your rights, and 4 costly mistakes to avoid in Ontario
Your strongest right as an Ontario payday loan borrower is the two-business-day cancellation window. You need no reason, pay no fee, and simply return the money. If a payday lender cashes a government cheque for you, the fee is capped at the lesser of $2 plus 1% of the cheque, or $10, according to the Government of Ontario. If a lender breaks any of these rules, you can file a complaint with Consumer Protection Ontario.
- Borrowing from an unlicensed online lender. Steps to Justice warns that unlicensed lenders may use illegal collection methods or be scams. Check the licence first.
- Taking a second loan to pay the first. The FCAC (2025) found 7% of payday loan users repaid one payday loan with another. Each new loan adds a new fee.
- Skipping the extended payment plan. After three loans in 63 days, ask for the plan. It splits the debt over at least two or three pay periods.
- Borrowing the full 50% of net pay. The law allows it, but repaying half your pay at once often leaves rent or groceries short. Borrow only what the bill needs.
What next: cheaper ways to cover the gap in Ontario
The cheapest fix is the one that avoids a second payday loan, so look at lower-cost options first. Our guide to payday loan alternatives in Canada ranks nine options by cost and speed. If you need a set amount, our guide to getting a $500 loan in Canada walks through costs and steps. Ask your utility, landlord or phone provider about a payment plan before you borrow.
Once this bill is paid, build a small cushion so the next one does not need a loan. The FCAC found in 2025 that 88% of payday loan users had no emergency savings, compared with 50% of people who did not use them. Keep saving your old loan payment, even $50 a pay. Equifax Canada reported in August 2026 that total consumer debt in Canada reached $2.68 trillion in the second quarter. Paying every bill on time keeps your own credit file strong.
Related questions
Is a payday loan legal in Ontario if it costs more than 35% APR?
Yes, if the lender holds an Ontario licence, the loan is $1,500 or less, lasts 62 days or less and costs no more than $14 per $100.
Can an Ontario payday lender take money from my paycheque?
No. Ontario bans wage assignments, so a payday lender cannot set up automatic deductions from your pay.
How many payday loans can I have at once in Ontario?
Only one at a time with the same lender. Ontario does not stop loans from different lenders, but each new loan adds a new fee.
Where do I complain about a payday lender in Ontario?
File a complaint with Consumer Protection Ontario through the Government of Ontario's consumer complaint page.
Sources
- Government of Ontario, Payday loans: your rights (updated December 31, 2024)
- Financial Consumer Agency of Canada, Payday loans (modified October 14, 2025)
- Financial Consumer Agency of Canada, Understanding payday loan use and perspectives (modified September 17, 2025)
- Canada Gazette, Criminal Interest Rate Regulations, SOR/2024-114 (June 19, 2024)
- City of Toronto, Payday loan establishments (modified January 16, 2026)
- Steps to Justice (CLEO), Check if the payday lender is licensed (reviewed January 17, 2025)
- Bank of Canada, Policy rate announcement (September 2, 2026)
- Equifax Canada, Q2 2026 Market Pulse (August 24, 2026)
- Hicks Morley, Ontario minimum wage to increase October 1, 2026 (April 1, 2026)
- LAWPRO practicePRO, Ontario Small Claims Court limit increased to $50,000 (October 3, 2025)
- Hoyes, Michalos & Associates, Payday loan in collection (updated April 29, 2026)
About the author
LoanBoys Editorial Team
Personal finance writers, Loan Boys
Every figure in this guide is checked against its primary source and dated. Drafts are prepared with AI assistance and edited by a person before publication.
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