Payday loan costs in Canada aren't set by one national interest rate — they depend on which province you borrow in. Nine provinces license payday lenders and cap the cost of borrowing directly; everywhere else, the federal criminal rate of interest is the backstop. Here's exactly how the rules work in 2026 and what they mean in real dollars.
The Federal Limit: Canada's Criminal Rate of Interest
Under the Criminal Code, no lender in Canada may charge an effective annual rate of interest above 35% on a loan — except payday loans made in a province with its own payday-lending law, which are specifically exempted from this cap. That exemption is the entire reason payday loans can legally cost so much more than a bank loan or online installment loan.
Provinces With Payday Loan Cost-of-Borrowing Rules
Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Saskatchewan each license payday lenders and cap the maximum cost of borrowing at $14 for every $100 advanced, with lenders in some provinces also permitted to charge a one-time fee (up to around $20) if a payment is dishonoured.
What $14 per $100 Actually Costs You
Borrow $300 for a typical two-week payday-loan term in one of these provinces, and the maximum cost of borrowing is $42 — so you'd repay $342 on your next payday. Expressed as an annualized rate the way a bank APR is calculated, that $14-per-$100, two-week cost works out to roughly 365% per year — even though you only ever pay the one-time fee, not an annual rate.
Where the 35% Criminal Rate Applies Instead
In the territories and any jurisdiction without its own payday-lending statute, there is no separate payday exemption, so the general 35% federal criminal rate is the hard ceiling. Quebec is also notably absent from the nine-province list above — its consumer protection rules on the cost of credit are strict enough that the conventional payday-loan model has largely not taken hold there, unlike in most of the rest of the country.
How This Compares to Installment Loans
Because installment lenders are not payday lenders, they're bound by the 35% criminal rate rather than the provincial payday exemption. On CanuckLenders.com, options like easyfinancial and mainstream banks such as TD Bank advertise APRs well under that ceiling — a useful comparison point against the effective ~365% cost of a regulated payday loan. For small, fast-funded amounts that fall under the provincial payday framework instead, see lenders like iCash or GoDay in our Fastest 24/7 e-Transfer Payday Loans category. If you'd rather avoid payday-style pricing altogether, read 7 Payday Loan Alternatives in Canada first.
Frequently Asked Questions
Is a 35% interest rate the same as a 35% APR?
Essentially yes — the Criminal Code measures the "effective annual rate," which is calculated the same way APR is: all mandatory borrowing costs, annualized. That's different from a payday loan's $-per-$100 fee, which only applies to the loan's short term, not a full year.
Why do some payday loans effectively cost more than 35% a year?
Because provincially licensed payday loans are explicitly carved out of the federal 35% cap. The province regulates the fee per $100 instead of an annual rate, which is why the effective annualized cost of a payday loan can run many times higher than the federal ceiling that applies to every other type of loan.
Which provinces have no payday-loan-specific law?
Outside the nine provinces listed above, and in the territories, there's no separate payday exemption, so the federal 35% criminal rate applies as the maximum for any loan, payday or otherwise.
Bottom Line
Where you live changes what a payday loan is allowed to cost you. Before borrowing, check your province's rule, calculate the dollar cost (not just the headline fee), and compare it against an installment loan on our loan comparison page.