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Payday Loan Users Get Stronger Protection

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Payday Loan Users Get Stronger Protection

McGuinty Government Balances Needs Of Industry And Consumers

Ministry of Consumer Services

Users of payday loans in Ontario can look forward to new consumer protections starting next month.

The Payday Loans Act, 2008, provides for strong consumer protections, prohibits certain practices and provides for enforcement and prosecution of violations.  Starting on July 1, 2009, the following consumer protection provisions will be in effect:

  • Concurrent and "rollover loans" are prohibited. 
  • Discounting the loan principal is prohibited - for example, if the loan is for an amount of $300, the borrower is entitled to receive $300.
  • Payday loan borrowers have a two-day "cooling off" period in which they may cancel a payday loan agreement with no reason and without incurring a penalty.
  • Payday loan borrowers must receive a written copy of their payday loan agreement which must contain mandatory text about cancellation rights and certain refund rights.  The agreement must also set out the amount of the loan, when the loan is due and the total cost of borrowing.
  • Payday lenders and loan brokers must post a certificate of licence visible to persons immediately upon entering their offices.

On April 1, 2009, the government imposed licensing requirements on payday lenders and loan brokers.  It also created administrative monetary penalties to deal quickly and effectively with many infractions under the Act. 

Ontario has set a total cost of borrowing cap for payday loan agreements of $21 per $100 borrowed, as recommended by Ontario's Maximum Total Cost of Borrowing Advisory Board.  It is anticipated that this cap will come into force later this year.  

Quick Facts

  • A payday loan is a short-term loan for a small amount of money. The average payday loan in Canada is about $300 for a term of two weeks.
  • There are about 1,350 pay day loan storefronts in Canada, with approximately 750 in Ontario.
  • Ontario consumers can get payday loans at a storefront and by internet and telephone.

Background Information

Additional Resources


“Payday loans are an important source of financial assistance for many people in Ontario. We're taking steps to assure consumers of stronger protections while balancing the needs of the industry.”

Ted McMeekin

Minister of Consumer Services

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