How much can I borrow?
Ontario caps a payday loan at $1,500 and at 50% of your net pay for the period. Here is how the two limits interact and which one usually binds.
Two limits apply to every payday loan in Ontario, and the smaller of the two is the one that governs.
Limit one: $1,500
No payday loan in Canada may advance more than $1,500. Above that figure the loan stops being a payday loan at all — the federal exemption that lets payday lenders charge what they charge only covers advances of $1,500 or less, on a term of 62 days or less. Any Ontario lender offering you $2,000 as a “payday loan” is offering you something else, under different rules and usually at a different price.
Limit two: half your net pay
This is the limit that actually binds for most people. A single payday loan may not advance you more than 50% of your net pay for the pay period the loan runs across.
Net pay means what actually reaches your account: your gross income for the period less deductions at source — income tax, CPP, EI, union dues and the like. Not your salary on paper, and not what you take home in a good month with overtime.
Some worked examples:
- You are paid $1,000 net every two weeks. The most you can be advanced is $500.
- You are paid $1,600 net every two weeks. The ceiling is $800.
- You are paid $2,400 net twice a month. The ceiling is $1,200.
- You are paid $3,400 net monthly. Half is $1,700, so the $1,500 cap takes over and $1,500 is the most you can have.
You have to earn over $3,000 net in the period before the $1,500 ceiling is the binding one. Below that, your income sets the limit.
Why the rule exists
Because a loan you cannot repay out of one pay period is a loan that turns into three. Capping the advance at half your net pay leaves the other half for rent, groceries and everything else that does not stop because you borrowed money. It is a blunt instrument and it is meant to be.
When your term is longer than one pay period
An Ontario payday loan cannot come due before your next regular income date, and it cannot run longer than 62 days. If you are paid monthly, the loan naturally runs about a month; the 50% test is applied against that monthly net pay.
We may offer you less than the maximum
The ceilings above are what the law permits. What we can approve is a separate question, and it comes out of the assessment: how regular your income is, what your account looks like over the last several pay cycles, and what you are already committed to. All credit welcome — approval is based on your income and banking history. No lender that actually assesses applications can promise you a particular amount before it has looked.
Asking for less than the maximum is often the better move. The cost of borrowing scales exactly with the amount: $14 per $100, every time. Borrowing $400 instead of $700 saves you $42, and it is $342 less to find on your next payday.
Before you decide on a number
Work backwards, not forwards. Take your next net pay, subtract the rent, the bills and the food you already know are coming, and see what is genuinely left to repay a loan with. The figure the calculator on our rates and fees page shows you is the total that has to come out of that pay — cost of borrowing included.
