As of January 1, 2017, the maximum cost of borrowing a payday loan has gone down

Posted
May 18, 2017

Information from Consumer Protection Ontario: What you need to know before you take out a short-term, cash advance payday loan from a retail store or online.

How it works

A payday loan is:

  • usually a small value loan taken out for a short time, typically until your next payday
  • loaned at a retail store or online
  • the most expensive form of consumer loan in Ontario
  • an unsecured loan (you cannot put any property as collateral or guarantee for the loan, you need to provide the lender with a post-dated cheque or a pre-authorized debit)

Most lenders do not do credit checks before issuing payday loans. They usually ask borrowers to:

  • prove 3 months of continuous employment
  • give proof of address (e.g., they can ask to see a utility bill)
  • have a chequing account

Read more: As of January 1, 2017, the maximum cost of borrowing a payday loan has gone down