What is an extended payment plan?

An extended payment plan lets you repay a payday loan in instalments instead of in one lump on your next payday. In Ontario it is not a favour and it is not a product — it is a right that attaches automatically in defined circumstances, and it cannot cost you anything.

When you are entitled to one

If you take a third or subsequent payday loan from the same lender within a 63-day period, that loan must be repayable on an extended payment plan. The count is per lender, and 63 days is roughly two months, so three loans in that window triggers it.

You do not have to ask cleverly, negotiate, or qualify on any other basis. The entitlement is in the statute.

How the instalments work

• If you are paid semi-monthly, bi-weekly, or more frequently than that, the plan must spread the loan across at least three pay periods, and no single instalment may exceed 35% of the total you owe — advance plus cost of borrowing.
• If you are paid less frequently than semi-monthly or bi-weekly (monthly, for example), the plan must spread it across at least two pay periods, and no single instalment may exceed 50% of the total.

A worked example. You borrow $500 on your third loan inside 63 days. The cost of borrowing is $70, so the total is $570.

• Paid biweekly: three instalments of $190. Each one is 33% of $570, inside the 35% ceiling.
• Paid monthly: two instalments of $285. Each is 50% of $570, exactly at the ceiling.

It costs nothing extra

The total does not move. $570 is $570 whether it comes out in one payment or three. There is:

• No fee for entering the plan
• No additional interest for taking longer
• No penalty for ending it early — you may pay the outstanding balance in full at any time, and no charge, fee or penalty may be imposed for doing so

That last point is worth restating, because it is the opposite of how most credit works. Ending the plan early is free.

It is not a rollover

A rollover is where a lender extends your loan, or lends you fresh money to pay off the old one, and charges you again for the privilege. That is prohibited in Ontario, full stop, and no lender may do it.

An extended payment plan is the legislature’s replacement for it: the same relief on your cash flow, with none of the extra cost. Same total, more time.

What it signals

Being entitled to an extended payment plan means you have taken three payday loans in about two months. The plan is genuinely useful and you should use it — but the pattern behind it is the thing to deal with.

Three loans in 63 days usually means the shortfall is not a one-off. Each loan takes $14 per $100 out of a pay packet that was already short, which makes the next one more likely rather than less. It is worth a free conversation with a non-profit credit counsellor accredited by Credit Counselling Canada; they will look at the whole picture, they charge nothing where you cannot pay, and they have nothing to sell you.

How to get one

Tell us, and we will set it up. If you are entitled to a plan we will put you on one — that is the law and it is also the sensible thing for both of us. If you think you are entitled and a lender refuses, that is a complaint to the Ministry: see How do I complain about a payday lender?