March 15, 2018
Do you know how much interest is charged on payday loans? Most people are shocked to learn that triple digit interest rates are common. How can that be? Doesn't Canadian law prohibit lenders from charging more than 60% annual interest on loans?
It does. But in 2007, an exemption was introduced for payday loans. These are short-term, small loans (up to $1,500) designed to bridge a borrower through a cash shortfall until their next payday, when generally the loan must be repaid in full.
Every year, nearly two million Canadians use payday-lending services. And most have no idea how expensive payday loans are. Our new pages on payday loans will help you understand how they work:
Why you should avoid payday loans: Not only are they a very expensive way to borrow money, there are other risks.
Getting a payday loan: If you have no other option, learn how to prevent problems when getting a payday loan.
Cancelling a payday loan: You can back out of a payday loan within a cooling-off period, and you can sometimes cancel after this period.
We've also posted new pages on other aspects of borrowing money:
Student loans: Your rights and options if you're having difficulty repaying a student loan.
Many thanks to Vancouver lawyer Ari Wormeli for reviewing this information for legal accuracy.