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Buyers Guide

Payday Loans Ontario: Avoid Getting Ripped Off

When shopping for payday loans in Ontario, research is crucial.

You see, while payday loans can be a life-saver during financial challenges like a medical emergency or unexpected car repair, the wrong loan – or worse, a payday loan scam – can make your cash issues significantly worse.

Read on to learn more about protecting yourself and finding a lender that meets your payday loan need.

Table of Contents

  1. Factors to Consider When Choosing a Payday Lender in Ontario
  2. What Documents You Need to Get Payday Loans in Ontario
  3. How to Avoid Payday Loan Scams in Ontario
  4. Getting the Best Interest Rate
  5. How Late Fees Work for Payday Loans in Ontario
  6. Tips for Repaying Your Payday Loan Fast
  7. Payday Loan Alternatives for Ontario Residents

Factors to Consider When Choosing Payday Loans in Ontario

It can be tempting to accept the first payday loan you get approved for. After all, if you’re seeking a payday loan you’re likely facing a financial emergency.

But here’s the deal.

Giving the following factors some thought will go a long way towards fulfilling your payday loan need while saving you headaches – and money – down the road.

Legitimacy

To provide payday loans in Ontario, a lender must be licensed by the Ontario Government.

You must be able to find this license easily  in their physical branch or website in the case of online payday loans in Ontario.

Here’s the Ontario payday loan license for Cash Money, one of the most prominent lenders in the country (you’re probably hearing their jingle in your head now).

The document clearly identifies a license number, address for the payday lender, date of issue, date of expiry, and the legislation that binds it (in this case the Payday Loans Act, 2008).

You can also search through the Ontario Government’s database of lenders.

Just select ‘Lender, Loan Broker’ under  ‘License/Registration/Appointment Type.’

If you’re trying to research a specific lender, you can enter their name and address in the field.

If you’d just like a list of licensed companies providing Ontario payday loans, you can just hit enter after selecting ‘Lender, Loan Broker.’

You can get as specific with your criteria as you’d like (down to the lender’s physical address) or you can just search by all lenders.

Once you hit ‘Submit,’ the website will show you licensed payday lenders based on your criteria.

If you’re researching a specific lender and nothing shows up, run for the hills! They’re not licensed to provide payday loans in Ontario.

There are many scams out there; so much so that the local Toronto government has clamped down on the industry as a whole.

Reputation

Of course, just because a payday lender is licensed doesn’t mean they’re necessarily going to fulfill your payday loan need while providing you great service.

That’s where reputation research comes in – and there are plenty of tools to help you do this.

Once you’ve found a lender you’re interested in, do a search for them on the Better Business Bureau website for Ontario.

What’s great about this website is that it will not only give you a rating for the lender – it’ll also tell you the specific (not just some generic text) reason for the rating.

Take Bolt Payday, for example.

This is the Better Business Bureau (BBB) report on Bolt Payday. You can see an advisory message in the grey box at the top of the page.

The Better Business Bureau has given Bolt Payday an ‘F’ (the lowest possible rating) because of the lender’s own admission that it has no government affiliation and charges interest in excess of what Ontario laws allow.

In this case?

You’d be wise to bolt away from Bolt Payday!

It’s worth pointing out, however, that the “THIS BUSINESS IS NOT BBB ACCREDITED” notice isn’t a problem in and of itself.

That just means the business in question hasn’t sought accreditation – and there are plenty of reputable businesses that haven’t.

Of course, you’ll also want to hear from people who have actually used the payday loan provider in question.

You can find these reviews via Trustpilot, a popular site that contains customer reviews for a number of services, including payday loans Ontario and even other types of loan providers like personal loans in Canada.

Just search for the company name (or, if you haven’t got a specific company in name, just search “Payday Loans”) and you’ll see the reviews.

What should you look for?

Aside from any obvious red flags, pay attention to comments about the company’s customer service.

You want to make sure there will be competent customer service representatives available to help you should you need assistance.

How Much Your Online Payday Loans in Ontario Will Actually Cost

By law in Ontario, payday loan providers are required to tell you – on the first page of your loan contract – exactly how much you’ll be paying for the loan.

Thanks to the Payday Loans Act of 2008, lenders are not allowed to charge you more than $15 in fees for every $100 you borrow.

That doesn’t count for non-payment fees, of course; it just means that lenders are not allowed to charge you more than $15 per $100 borrowed granted you uphold your end of the deal and pay on time.

That works out to an annual percentage rate (APR) of just under 400%. Of course, in an ideal world you’re not going to hang onto your payday loan for a year – but Ontario payday loan regulations require lenders to display your interest rate as an APR.

Payday loan providers are also required to display a poster somewhere in their establishment/on their website detailing the cost of taking out a loan over time.

Here’s an example of a poster payday lenders are required by Ontario law to have on their website or in their physical location. It communicates exactly how much you’ll pay for the loan.

What this all works out to is this.

As long as you read and understand the terms payday loan providers in Ontario are required to give you, there should be no surprises when it comes time to foot the bill.

How Fast the Company Can Get You the Money

There’s no sense in wasting your time going through the application process for a payday loan only to find out that the company can’t get you the money for a week while you need it tomorrow.

There are plenty of instant payday loans in Ontario that can e-transfer you the loan relatively quickly.

Many of these are online payday loans that don’t even require you to go into a physical location.

Just be careful.

We’ll explore safeguarding yourself from payday loan scams briefly but for now, just know that there are a ton of scammy online payday loans in Ontario targeting people who need cash fast.

Con artists know that people seeking instant loans are likely desperate and may not do as much due diligence, particularly when seeking instant payday loans in Ontario.

How Much of a Loan Can You Handle?

Under Canadian law, payday loans in Ontario cannot exceed $1,500 each.

Exactly how much of a loan you get approved for will depend on your income; lenders are not permitted to loan you more than 50% of your net annual pay.

Still, regardless of what your loan provider approves, make sure to consider your entire financial situation (including your job stability, other bills you know are coming due, etc.) before accepting.

This is especially true if you’ve taken a payday loan in the past; according to the Center for Responsible Lending, a whopping 50% of payday loan borrowers default on a loan within two years of their first loan.

Avoid getting lulled into a false sense of security and remember that situations can change overnight.

Be extra cautious if you’re looking for payday loans for disability income recipients in Ontario since your income relies heavily on government evaluations.

What Documents You Need to Get Online Payday Loans in Ontario

Exactly what documents you need to secure a payday loan in Ontario will vary based on the lender as well as whether you’re visiting a physical location or securing online payday loans in Ontario.

However, generally, you can expect them to ask you for the following.

Personal Information

Your lender will ask for information about you, possibly including:

  • Valid government ID: Passport, driver’s license, etc; your OHIP card may not be accepted
  • Your home address
  • Contact information, including your phone number and email address (don’t worry, there are laws regarding how often they can contact you; no more than three times weekly and never on holidays)
  • Your Social Insurance Number (many payday loans in Ontario do no credit check and won’t require this)

Employment Information

The following information will help your lender determine how much of a loan you can afford:

  • Employer name and contact information (lenders are not allowed to garnish your wages; this information can be used for other purposes, like verification)
  • Information about your pay cycle frequency (biweekly, monthly, etc)
  • Your net income
  • If you’re seeking online payday loans in Ontario while on disability, you’ll need proof that your total net income (including disability payments) meets the required $800 monthly threshold

Banking Information

  • Account, routing, and institution numbers for your checking account (lenders can withdraw funds from your account on the payment due date but must compensate you and may even forfeit the cost of the loan if they try to process the payment more than once knowing it will cause overdraft fees)
  • A post-dated cheque, in some cases, if you’d rather not provide banking account information

As you can see, payday lenders may ask you for some very private information.

The good news?

You already know how to research a lender’s reputation.

Working with a quality lender will decrease the chances of this information being used maliciously; even if it were, you’d have plenty of recourse thanks to the laws surrounding payday loans in Ontario.

Plus, with this next section we’re about to dive into, you’ll learn even more about avoiding payday loan scams that might abuse your personal information.

How to Avoid Scams with Payday Loans in Ontario Online

Because people seeking payday loans tend to be facing financial challenges like an unexpected car repair or medical emergency, many financial scammers use tactics (like the following three) to take advantage of your emotions.

Particularly gross scams target people seeking online payday loans in Ontario while on disability.

These scammy payday loans for those on disability income in Ontario can leave already struggling folks financially ruined, highlighting the importance of taking extreme caution.

Phony Collections Call

Of course, phony collections calls take on a variety of forms in Toronto and aren’t exclusive to payday loans.

In the payday loan context, however, it involves a call from someone claiming to be a debt collector working on behalf of your payday loan provider when they’re actually a third party.

They may have your personal information, including your bank account number, Social Insurance Number or details about your job.

This type of scam preys on your stress. The fraudsters behind it will often bombard you with threats of repossessing your car, garnishing your wages, etc.

No licensed lender who values their business will behave like this – even if your repayments are overdue.

Not only is it bad business; it’s also illegal in Ontario for payday lenders to use “threatening or intimidating language.” Same for “excessive or unreasonable pressure.”

But wait!

How did this malicious third party get your information in the first place?

There are a few potential explanations.

Your payday loan provider may have sold your information and/or your debt to a shady collections agency.

It’s also possible that the payday lender’s database was hacked, exposing your information.

In either case, you can file a complaint with the Better Business Bureau via the lender’s profile on their site. You can also file a consumer complaint with the Ontario government here.

Phishing Email/Text

At some point in your life, you’ve probably received a phishing email trying to lure you into providing information about your bank accounts.

Under normal circumstances, you probably easily identified those emails as scams.

However, during the high-stress financial situations that often prompt people to take out online payday loans in Ontario, it’s important to double-check everything.

Some scams promise instant payday loans in Ontario with terms that sound too good to be true. Others offer payday loans for bad credit in Ontario that are similarly too good to be true.

Lately, phishers have actually taken to scamming people through malicious calendar invites.

Instead of following the link or instructions in the email/text itself, go to the lender’s website on your own via your web browser and see if you can access the information there.

When in doubt, just give the lender a call via the phone number they have listed publicly online. They should be able to help you determine if the communication was legit.

Completely Bogus Loans

In some cases, scammers with access to your financial information may take a subtler approach and take loans out in your name.

Check your credit report regularly to make sure there are no inquiries you don’t recognize.

If your payday loan provider has a website, log into it every now and again to make sure your contact information hasn’t been changed by a scammer looking to keep you out of the loop.

People seeking online payday loans in Ontario for ODSP recipients are particularly susceptible to this type of scam since fraudsters may assume the victims are unable to keep a close eye on their financial information.

Getting the Best Interest Rate on Payday Loans in Ontario

So by now, you know how to choose a payday lender in Ontario.

You know what documents you need for the application process.

You also know how to avoid common payday loan scams.

What’s next?

We’re gonna talk about getting you the best deal, that’s what’s next!

Lenders are, of course, limited to charging you $15 per $100 for payday loans in Ontario. So if you take out a 14-day short-term loan of $500 and pay it off by the due date, you’ll pay no more than $575.

Many lenders will just charge you the maximum allowable amount. Payday lending can be risky, so charging every borrower the maximum interest allows companies to hedge against defaults.

Other lenders may offer a blanket rate that’s lower than the maximum allowed. See our chart above for more details.

Some lenders (not all – be sure to ask yours), however, may offer you a better rate based on the following criteria.

A Good Credit Score

A good credit score goes a long way – and it may get you a better interest rate on your payday loan in Ontario.

If you’re relatively free of consumer debt and have a history of paying your loans on time, payday loan providers in Ontario that offer individualized interest rates and take credit scores into account may charge you less.

Keep in mind that many payday loans in Ontario do no credit check during the application process, so this may not apply.

Learning how to build your credit score in Canada is still a very valuable thing, however, so keep that in mind.

A Good History with the Lender

If you’ve been taking out loans with a single payday lender for years and have a history of paying on time with no hassle, they may cut you a deal.

How Late Fees Work for Payday Loans in Ontario

Let’s say you hit a speed bump and aren’t able to repay your loan.

What happens then?

Well, for starters, if you’re within two business days of opening the contract with the lender, Ontario law permits you to cancel the loan with zero fees – no explanation needed.

This is great for a situation where, say, you take a 14-day short-term loan and then realize quickly (within two business days) that there’s going to be a delay with your next paycheck and you won’t be able to repay the loan on time.

Thanks to Ontario’s payday loan regulations, you can cancel your payday loan with zero consequences.

But what if you’re past the two business days and you’ve already spent the money?

Things can get a little dicey there – but, thankfully, there are still regulations in place to protect you from predatory collections processes.

Lenders can’t, for example, garnish your wages or harass your loved ones if you fail to pay on time.

Here’s what they do.

Keep in mind that, depending on your lender’s rules, you may be able to avoid or at least minimize these penalties if you communicate (before the payment due date) your situation.

Attempt to Charge Your Bank, Resulting in Fees for You

Many payday lenders collect payment via a pre-authorized debit from your checking account.

If they attempt to bill your account (which they are allowed to do once) and the cash isn’t there, they may charge you an insufficient funds fee. Your bank may charge you a separate insufficient funds fee as well.

Charge You Late Payment and Arrears Fees

Different lenders charge different fees for late payments and instances of accounts going into arrears.

Exactly what this fee is should be communicated to you via your loan contract. If you’re not sure about it, ask.

Collections Fees

If your debt goes into the collections phase (which happens when you owe money and the lender has tried and failed repeatedly to get in touch with you), the payday loan company may charge you an administrative fee for the collections process.

As you can see, these three methods aren’t particularly fun. And they all have the potential to crush your credit score.

That’s why, next, we’re going to discuss ways you can pay off your debt in time.

Tips for Repaying Your Payday Loans in Ontario

Ask Your Boss

Sometimes you’ve got to swallow your professional pride and ask for a favour.

But this doesn’t have to turn into you groveling at your employer’s feet asking them for money.

You could simply ask about the possibility of putting in some overtime.

It’s a vague enough request that doesn’t give away too much. After all, people could use the extra cash for all sorts of reasons.

You may even find that your boss is willing to offer you an advance on your next paycheck.

Pick Up A Temporary Side Hustle

If overtime at your full-time job is a no-go, consider doing some gig work to make a bit of extra money.

If you have skills as a writer, graphic designer, or any number of other creative endeavours, you can find gig work on websites like UpWork or even your local classifieds board.

Plus, one of the perks of living in a large city like Toronto is that you can find part-time jobs galore.

Budget, Budget, Budget

Sure, having a payday loan doesn’t mean you and your family can’t eat.

But if you think it’s going to be a tight month and there’s a chance you might just barely repay your loan, you’ve got to be ultra-cautious.

That means no unnecessary junk snacks or dinners out. It’s going to be tough – and understandably so. For many people in a stressful spot, it’s natural to want to eat and spend compulsively.

Resist the urge and promise yourself a nice meal of your choice once the loan is paid off. The satisfaction will be worth it.

If you’re really in a bind, you can even consider taking public transit for a few days and saving yourself on gas money.

Payday Loan Alternatives for Ontario Residents

Payday loans can be a great way to get quick cash and pay any outstanding debts. But it’s still worth considering some alternatives, of which there are many available to Ontario residents.

Negotiate with Your Creditors

If you’re running late on paying a monthly bill (such as your phone, utilities, internet, etc) give the creditor a call before you reach for a payday loan.

You might be surprised to learn how many providers are willing to work with you and grant you an extension. They may be especially willing to make an exception if you’ve been historically reliable with your payments.

A Credit Card Cash Advance

Depending on how your credit card account is set up, you may be able to transfer funds from your credit card to your bank account in the form of a cash advance.

From there, you can spend the money just as you would any other cash in your bank account.

There are still high fees involved – but you’ll have a significantly lower APR than you would with a payday loan.

If your credit card doesn’t allow you to take a cash advance in the form of a bank deposit, you can always withdraw the cash and deposit it into your account.

It’s an option worth considering if you have a credit card.

If you don’t, you can look into instant approval credit cards with no credit check in Canada and how to get one.

Personal Loans

Of course, many people who seek payday loans have already tried and failed to get other types of personal loans.

If you have decent credit and the luxury of waiting a few days, you should try to apply for a personal loan before reaching for a payday loan in Ontario.

As with credit card advances, you’ll still pay interest – but it’ll be lower than with payday loans.

Institutions offering types of loans other than the payday variety also tend to be more flexible in terms of payment timeline and interest.

Tap Into Your RRSP

If you’ve run into serious financial hardship, you can consider tapping into your retirement account (RRSP).

Normally, there’s a fee involved with withdrawing from your RRSP before you’ve reached retirement age.

But if you fill out this form with the Financial Services Commission of Ontario detailing your financial hardship, you may be deemed exempt from those fees.

Conclusion

When shopping for payday loans in Ontario, it’s crucial that you do your research.

This comprehensive guide has given you a whole host of information regarding factors to consider when choosing a lender, ways to avoid scams, tips for paying off your debt quickly, and payday loan alternatives.

When used responsibly, payday loans can be a reliable way to make it through financial hardship – and hopefully, this article gave you some insights into doing just that!

Frequently Asked Questions

My credit is bad – can I still get a payday loan?

There are many payday loans in Ontario that conduct no credit check as part of the application process. As such, a bad credit score should not stop you from getting a payday loan.

In fact, there are even many payday loans for bad credit in Ontario.

Can I get online payday loans in Ontario if I’m on disability (ODSP)?

There are many online payday loans in Ontario for ODSP recipients. As long as your total income (including ODSP payments) meets the $800 monthly requirement, you can legally get a payday loan.

How do I repay my payday loan in Ontario?

In most cases, the lender will get you to fill out a pre-authorized debit form that allows them to automatically deduct the payment from your bank account on its due date.

Can I get multiple payday loans?

A single lender is not allowed to issue you a new payday loan in Ontario before you’ve paid off your first one.

Perks of Living in Ontario

Home to the biggest city in Canada (Toronto) as well as the nation’s capital, Ontario is a major hub of activity that provides residents several benefits.

For one, it ranks among the cheapest provinces to take out a payday loan (Prince Edward Island is the most expensive at $25 per $100 borrowed).

Outside of cheaper payday loans, perks of living in Ontario include the following.

High Quality of Life

The Mercer Quality of Living report ranks two Ontario cities – Toronto and Ottawa – in the top 20 worldwide when it comes to quality of life. Not bad!

Education Opportunities

If you want to raise a family in Canada (or attending school here yourself), you can’t do much better than Ontario!

The province is home to four of the top 200 universities in the world.

According to the Wall Street Journal, the University of Waterloo ranks second when it comes to the number of graduates hired by Silicon Valley companies.

It’s no surprise, then, that 68% of adults in Ontario have a post-secondary education – higher than any other countries tracked by the Organization for Economic Co-Operation and Development.

Great Provincial Health Insurance

Ontario is home to OHIP, a health insurance plan that covers the following:

  • Family doctor appointments
  • Visits to walk-in clinics
  • Visits to the emergency room
  • Medical tests and health-related surgeries

It’s taxpayer-funded and Ontario residents are always covered by it, even if they aren’t working.

Personal Debt Statistics in Ontario

According to the Financial Accountability Office of Ontario (FAO), the average Ontario household owes nearly $154,000.

That works out to roughly $1.71 for every dollar of income.

The FAO predicts that the average household debt will rise to $175,000 by 2021.

According to the FAO, increased consumer spending and home purchases are major contributors to the projected rises.

5 Affordable Yet Fun Things to do in Ontario

Visit the Art Gallery of Ontario

Located in downtown Toronto, admission to the Art Gallery of Ontario (AGO) is free on Wednesdays after 6PM.

If you’re 25 and under, admission is free regardless of when you visit. An unlimited annual pass is $35 while a single adult admission ticket is $25.

See the Royal Ontario Museum

Also in downtown Toronto, the Royal Ontario Museum (ROM) is free between 5:30 and 8:30.

Outside of these hours, general admission costs $23 for adults, $18 for students, and $14 for children aged 4-14.

Check Out Niagara Falls, Ontario

Located on the border between Ontario and New York State in the USA, Niagara Falls is one of the most breathtaking natural attractions in the world, let alone Canada.

Admission to view the falls is free and you can even cross the border (via a bridge) to check the falls out from the American side.

Hike Dundas Peak in Hamilton, Ontario

Dundas Peak is a popular hiking location in Hamilton, Ontario. Visit during autumn to get a stunning view of the area from Dundas Peak’s main lookout. It’s an Instagram-worthy view!

Visit the Nation’s Capital in Ottawa

Ottawa, Ontario is home to stunning gothic buildings in the political core. You can even participate in free capital city tours starting at the National War Memorial.

More Fun Things to do in Ontario

Looking for more awesome things to do in Ontario? Check out the awesome video below!

Map of Ontario

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