What an online payday loan is
An online payday loan is a small, short-term loan you apply for on a website instead of at a storefront. You borrow between $100 and $1,500, and you repay the full amount plus the cost of borrowing in one payment, usually on your next payday. Canadian law sets the longest possible term at 62 days. In Alberta, loans run 42 to 62 days and are repaid in instalments on your paydays.
The loan itself is the same product you'd get in a payday loan store. The same provincial licensing rules and the same federal cost cap apply. What changes is the process: identity checks, income verification and signing all happen digitally, so there's no line, no paperwork and no need to take time off work.
How the online application works
Fill in one short form
Your name, address, employer or income source, pay schedule and the amount you'd like. It takes about five minutes on a phone.
Verify your identity and income
Upload a photo of your government ID and connect your bank through secure, read-only verification. This replaces pay stubs and faxing.
Review your offer
A licensed lender shows the amount, total cost in dollars, APR and due date. You can accept or walk away.
E-sign and receive funds
Once you sign, the lender sends your money by Interac e-Transfer, often within a few hours on business days.
What an online payday loan costs
Since January 1, 2025, the Criminal Code caps payday loan costs at $14 for every $100 you borrow, including all fees. That cap is the same whether you borrow online or in person. Here's what the maximum looks like at common loan amounts:
| You borrow | Maximum cost | Total to repay | APR on 14 days |
|---|---|---|---|
| $100 | $14 | $114 | 365% |
| $300 | $42 | $342 | 365% |
| $500 | $70 | $570 | 365% |
| $1,000 | $140 | $1,140 | 365% |
| $1,500 | $210 | $1,710 | 365% |
The APR looks high because the fee is charged over a few weeks, not a full year. It's still the most useful number for comparing a payday loan with a credit card cash advance, an overdraft or a small loan from a credit union.
Who can apply for an online payday loan
- You're the age of majority in your province (18 in most provinces, 19 in BC, NB, NS and NL).
- You live in one of the nine provinces with a payday loan law. Quebec and the territories aren't eligible.
- You've had regular income for at least three months, from employment, a pension, or government benefits some lenders accept.
- You have an active Canadian chequing account, an email address and a phone number.
How much you can borrow depends on your income and your province. In Ontario and British Columbia, for example, a payday loan can't be more than 50% of your net pay for the pay period.
Online vs. storefront payday loans
| Online | Storefront | |
|---|---|---|
| When you can apply | Any time, 24/7 | Store hours only |
| Documents | Phone photo of ID, digital bank check | ID, pay stub, void cheque in person |
| How you get paid | Interac e-Transfer or direct deposit | Cash, cheque or prepaid card |
| Maximum cost | $14 per $100 | $14 per $100 |
| Cancellation right | Yes, set by your province | Yes, set by your province |
Check the lender's licence. Every legitimate online payday lender must be licensed in your province and should display its licence number. Offshore websites that skip licensing may ignore the $14 cap entirely.
When an online payday loan makes sense, and when it doesn't
It can make sense when
- You have a one-time, urgent expense
- You're sure your next paycheque covers the full repayment
- Cheaper options aren't available in time
Think twice when
- You'd need another loan to cover the repayment
- The expense is recurring, like rent every month
- You already have a payday loan outstanding
If a payday loan isn't right for you, our guide to alternatives covers credit union loans, employer advances and free credit counselling.