Helpful tips for payday lenders

Find out about the principles for managing a pay day loan company.

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In Ontario, the payday advances work, 2008 could be the law that is main pay day loans. The overall legislation and Administrative charges legislation have extra guidelines.

This guide describes lots of the guidelines you have to follow being a lender that is payday. You have to adhere to all the demands into the work additionally the regulations — not merely the people summarized in this guide.

You could lose your licence or face other enforcement action if you do not comply with all of the requirements. Find out about compliance and enforcement.

Pay day loan agreements

A loan that is payday describes the legal rights and responsibilities of both the financial institution while the debtor. Moreover it includes information for borrowers.

Information regarding the contract

You need to ensure that all cash advance agreements are the ideas put down in part 18 regarding the General legislation. For instance, you need to add:

  • details about borrowers’ rights
  • a dining dining table regarding the page that is first of contract providing you with price of borrowing facts
  • the expense of borrowing indicated as a apr (APR)

The data should be clear, understandable and simple to read.

Make reference to parts 29 and 37 associated with payday advances work, 2008 and part 18 for the General legislation for lots more information on cash advance agreements.

Limitations on agreements

As a payday loan provider, you can’t:

  • cost a lot more than $15 per $100 lent, like all charges and costs straight or indirectly attached to the pay day loan contract
  • provide or create (like on the part of another person) any extra merchandise or solutions associated with the loan that is payday, such as for example insurance coverage
  • come into a cash advance agreement in the event that advance try most than 50 % regarding the borrower’s web gain per loan
  • get into a quick payday loan contract that concludes ahead of the debtor was next scheduled to get earnings (more often than not, this is basically the date of this borrower’s next paycheque)
  • expand that loan agreement at night initial termination date
  • come right into a payday that is new by having a debtor who has got an outstanding cash advance balance with you — this means rollover loans is forbidden
  • make use of the suggestions in a credit card applicatoin for an online payday loan, any documents associated with an online payday loan application or the pay day loan contract it self for just about any needs except that supplying a loan that is payday

Relate to parts 32, 35 and 36 regarding the payday advances work, 2008 and parts 16.2, 17, 23, 27 and 34 associated with General legislation to learn more about restrictions on cash advance agreements.

Content of this contract

Once you come right into a quick payday loan contract by having a debtor, you have to immediately provide them with a duplicate of this contract.

If the debtor requests a additional content at any moment as much as a season following the loan agreement comes to an end, you need to provide it in their mind:

  • at no cost the time that is first request it
  • in the very very first day’s getting the demand or even the overnight that you might be available for company

Relate to point 29 of this payday advances work, 2008 and area 20 for the General legislation to find out more about supplying a duplicate for the contract.

Instalment re re re payments

The third agreement (and any subsequent agreements) must provide for an extended payment plan (instalment payments) if you enter into three or more payday loan agreements with a borrower within a 63-day period. You have to additionally follow these rules:

  • instalment re re payments should be distribute similarly more than a number that is minimum of borrower’s pay periods
  • instalment re re payments must not surpass the quantity specified in area 25.1 associated with General legislation
  • If a prepayment is made by a borrower, you have to:
    • adjust all future scheduled instalments and distribute them similarly throughout the term that is remaining of contract
    • provide the debtor an up-to-date contract written down
  • the price of borrowing, whenever changed into an yearly portion rates, needs to be lower than the unlawful interest rate as defined when you look at the Criminal rule of Canada (60 %), which will be determined differently compared to percentage rate that is annual

Relate to area 25.1 of this General legislation to find out more about instalment re re payments.