Ontario Lending Regulations
Complete guide to Ontario lending regulations, payday loan laws under the Payday Loans Act, interest rate caps, and borrower protections in Ontario.
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Payday Loan Regulations in Ontario
Ontario regulates payday loans under the Payday Loans Act, 2008. The maximum cost of borrowing is $15 per $100 borrowed. Payday lenders must obtain licensing through the Ontario Ministry of Public and Business Service Delivery. Rollovers and back-to-back payday loans are prohibited.
Pro Tip: If you're paying more than $15 per $100 for a payday loan in Ontario, the lender is breaking the law.
Criminal Rate of Interest
Under Canada's Criminal Code, no lender can charge more than 35% APR (effective January 2025). This applies across all loan categories in Ontario and nationally. This cap includes all fees and charges expressed as an annual percentage rate.
Pro Tip: Always ask for the total cost of borrowing expressed as an APR.
Consumer Protection Act Rights
Ontario's Consumer Protection Act, 2002 provides additional protections: lenders must provide clear written agreements, you have a 2-day cooling-off period for payday loans, unfair contract terms can be voided, and deceptive advertising is prohibited.
Pro Tip: The 2-day cooling-off period means you can cancel a payday loan within 2 business days without penalty.
Collection Agency Rules
Ontario's Collection and Debt Settlement Services Act regulates how debt collectors can contact you. Collectors cannot: call before 7 AM or after 9 PM, contact your employer (except to confirm employment), use threatening language, or call more than 3 times in a 7-day period.
Pro Tip: Keep a log of all collection calls including dates, times, and what was said.
Where to Get Help in Ontario
Resources include the Ontario Ministry of Public and Business Service Delivery, Credit Counselling Society, Legal Aid Ontario, and the Financial Consumer Agency of Canada for federally regulated lenders.
Pro Tip: Non-profit credit counselling through agencies like the Credit Counselling Society is always free.
Additional Tips for Success
- Verify payday lender licensing through the Ontario Ministry
- Take advantage of the 2-day cooling-off period for payday loans
- Report illegal practices to Consumer Protection Ontario
- Access free credit counselling via non-profit agencies
Frequently Asked Questions
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