If you're considering a payday loan in Ontario, it helps to understand exactly what the law allows before you borrow — not after. Ontario regulates payday lending under the Payday Loans Act, 2008, enforced by the Financial Services Regulatory Authority of Ontario (FSRA), and every licensed lender in the province has to operate within the same limits.
The Cost of Borrowing Cap
Ontario caps the cost of borrowing at $14 per $100 borrowed. That figure includes all fees and interest combined — a lender can't charge extra on top of it. Expressed as an annual percentage rate, that works out to roughly 365% APR, which sounds high compared to a credit card, but it reflects the short repayment window rather than a long-term interest rate.
Maximum Loan Term
Payday loans in Ontario are capped at a 62-day maximum term. In practice, most payday loans are taken out and repaid within a single pay cycle — usually 14 days — but the law allows for terms up to 62 days depending on the lender and the borrower's pay schedule.
Maximum Loan Amount
Provincial rules also cap how much you can borrow through a single payday loan, generally up to $1,500, and lenders are required to assess affordability before approving a loan of that size.
Your Rights as a Borrower
FSRA-licensed lenders are required to:
- → Disclose the total cost of borrowing in dollars and as an APR before you sign
- → Give you a copy of your loan agreement
- → Allow a cooling-off period (typically two business days) during which you can cancel the loan without penalty
- → Avoid rolling a loan into a new payday loan from the same lender before the first is repaid, in most circumstances
If a lender isn't licensed with FSRA, it isn't legally allowed to offer payday loans in Ontario — checking a lender's licence status before borrowing is one of the simplest ways to protect yourself.
Payday Loans vs. Other Short-Term Credit
A payday loan is designed to bridge a short gap before your next paycheque, not to serve as ongoing credit. If you find yourself needing to borrow every pay cycle, it's worth looking at whether a line of credit or a structured repayment plan might fit your situation better — we cover that comparison in more detail in Payday Loan vs. Line of Credit vs. Credit Card Cash Advance.
The Bottom Line
Understanding the $14/$100 cap, the 62-day term limit, and your cancellation rights puts you in a much stronger position before you borrow. A licensed Ontario lender should be able to walk you through all of these numbers clearly, in writing, before you sign anything. Ready to apply? See our Ontario payday loans page for city-specific details, or head straight to Get Approved.
This article is for general information and does not constitute financial advice. For details specific to your situation, consult FSRA's consumer resources or a licensed financial advisor.