More affordable but still extremely risky payday loans

Do you need money immediately? Can’t borrow from the bank, from a friend? Is Payday Loans Your Only Option? Since last summer, it should be more affordable.

Quebec has amended the Consumer Protection Act (CPA) and several new provisions govern these lenders.

Concretely, most offer their services on the web: you complete a questionnaire, provide your bank information, proof of salary, and in a few hours, the money is deposited in your bank account.

Usually, the contract provides that the lender, like, pretexpress911 (there are dozens because several disappear after a few months or years and new ones appear regularly), make a payment on the day of your pay.

An example of a loan

A loan of $ 300 obtained from will be reimbursed in six instalments of $ 90.21. Your total cost is $ 541.23, for fees of $ 241.23 and an annual interest rate of 32%. You will understand: it is very, very expensive.

At Option Consommateurs, Josiane Fréchette reports many testimonials from people who are caught in a domino effect: after the payday lender’s withdrawal, there is not enough money left for the other payments. The consumer must then assume additional costs, penalties and interest. Sometimes several tens of dollars …

Luckily in Quebec, case law means that the annual interest on payday loans cannot exceed 35%, she said (in some provinces, it exceeds 60%!). But it is already higher than that of store credit cards, which vary between 25% and 29%.


Since last August, lenders can no longer charge brokerage fees to their customers. Some were left with tens or even hundreds of dollars in fees for a $ 1,000 loan (the average payday loan would be in the $ 750 range).

Also, if the interest rate exceeds the official Bank of Canada bank rate by 22 percentage points (currently 1.75%), or 23.75%, the CPA provides for more stringent supervision for lenders.

For example, they must provide the borrower with a written calculation of its debt ratio so that the latter can make his budget. And if this ratio exceeds 45%, the contract is considered excessive. The consumer can then reduce the costs or simply request the cancellation of the contract within 10 days.

The Consumer Protection Office receives between 150 and 200 complaints per year, all types of high-cost lenders combined. There has been no increase since the changes to the law. One in three Canadians lives from one paycheck to another, according to the Canadian Payroll Association.


♦ Ask for help from the ACEF in your region at or 1 888 412-1313

♦ Several ACEFs offer solidarity or microcredit loans, usually at 0% interest, of $ 1,000 or less, to cover emergencies. But conditions apply, such as taking training in personal finance.

♦ Online budget or free application at