If you are comparing online payday loans in British Columbia, the most important information is not a lender's advertising claim—it is the provincial rulebook. BC regulates how much a payday lender can charge, how large the loan can be relative to your income, what must be disclosed, when you can cancel and what can happen if a payment is missed.
What is the legal maximum fee for a payday loan in British Columbia?
BC's Payday Loans Regulation states that the maximum amount a payday lender may charge, require or accept is 14% of the principal. In everyday terms, that is $14 for each $100 borrowed. The regulation also says the maximum includes amounts collected directly or indirectly from the borrower, so a lender cannot evade the cap by relabelling mandatory loan charges as separate service or administration fees.
| Amount borrowed | Maximum borrowing cost | Total repayment if paid as agreed |
|---|---|---|
| $100 | $14 | $114 |
| $300 | $42 | $342 |
| $500 | $70 | $570 |
| $1,500 | $210 | $1,710 |
These examples show the maximum permitted charges for a BC payday loan when it is repaid as agreed. If repayment fails, BC law separately allows limited default interest and a one-time dishonoured-payment fee. Your own financial institution may also charge an NSF or overdraft fee.
Rules for licensed payday lenders in British Columbia
Licensed payday lenders in BC must follow the provincial Act and regulation whether they lend from a storefront, online, or from outside British Columbia to a BC resident. Important protections include:
- ✓Licence required. Consumer Protection BC licenses payday lenders. Online and out-of-province lenders serving BC consumers must also be licensed.
- ✓Loan size and term. A payday loan is limited to $1,500 and must be repaid within 62 days.
- ✓50% income limit. A lender must not issue a payday loan exceeding 50% of the borrower's net pay or other net income expected during the loan term.
- ✓No rollovers or overlapping loans from the same lender. A lender cannot renew an existing payday loan for an extra charge or issue a new payday loan to pay out an outstanding payday loan.
- ✓Two-business-day cancellation right. The statutory period begins when you receive the first advance and ends at the end of the second day the lender is open for business after that date. No cancellation charge may be imposed when the statutory process is followed.
- ✓Early full repayment. You may repay the loan in full before the due date without an extra charge for doing so.
- ✓No advance payment to obtain the loan. Consumer Protection BC warns that payday lenders must not ask a borrower to pay upfront in order to receive the loan.
- ✓No tied selling. The lender cannot make the payday loan conditional on buying other goods or services, and BC also prohibits payday lenders from selling or requiring insurance for a payday loan.
- ✓Repeat-borrowing protections. Consumer Protection BC states that when a borrower takes a third payday loan in a two-month period, repayment must be phased over two or three pay periods.
- ✓Limits after default. The lender may charge interest of up to 30% per year on outstanding principal and a one-time fee of up to $20 for a dishonoured cheque or pre-authorized debit.
How to verify if an online lender is licensed in British Columbia
Before providing banking or identity information, use Consumer Protection BC's official payday-lender search. A licence is particularly important with online borrowing because a polished website does not prove that the company is authorized to lend to BC residents.
- Open Consumer Protection BC's payday lender licence search.
- Select Payday Lender as the licence type.
- Search by business name or licence number and choose an active status.
- Compare the legal entity, address and licence number with the business shown in the loan agreement.
BC also requires an internet payday lender to display prescribed cost and licence information prominently for BC borrowers, including before the online loan application. If a site hides the lender's legal name, licence information or borrowing cost, treat that as a reason to investigate further before providing personal information.
Can a BC payday lender contact or collect from your employer?
A BC payday loan agreement must not contain a provision giving the lender permission to collect a delinquent loan from your employer. That protection is different from ordinary employment verification that a borrower may separately authorize during an application. Read the consent language carefully so you understand what information may be verified and how it may be used.
BC also limits the purposes for which payday lenders can obtain consent to use or disclose personal information. Consumer Protection BC says lenders cannot require, request or accept consent to use a borrower's personal information for a purpose other than offering, providing or facilitating the payday loan.
What happens if you cannot repay on time?
If the agreed repayment is not made, BC law permits default interest of up to 30% per year on the outstanding principal. A lender may also charge a one-time fee of up to $20 for a dishonoured cheque or dishonoured pre-authorized debit. These default amounts are separate from the 14% borrowing-cost cap that applies when the loan is paid as agreed.
Your bank or credit union may charge its own NSF or overdraft fee, and an unpaid account may be sent to collections or become the subject of legal action. If you expect a repayment problem, contact the lender before the due date, ask what lawful arrangements are available and avoid taking another high-cost loan merely to cover an existing debt.
Safer financial alternatives to payday loans in British Columbia
The Financial Consumer Agency of Canada (FCAC) describes payday loans as an expensive way to borrow. Before using one, compare options that may cost less if they are available to you:
- ✓A personal loan or line of credit from a bank or credit union.
- ✓Overdraft protection on your chequing account.
- ✓A credit-card cash advance after comparing the fee and interest rate.
- ✓Asking a utility, landlord, creditor or other bill provider whether the due date can be changed or a payment arrangement is available.
- ✓An employer pay advance, or help from family or friends, where practical.
FCAC's published example compares a $300 payday loan for 14 days with a line of credit, overdraft protection and a credit-card cash advance. At a $14-per-$100 payday-loan cost, the payday loan costs $42 in the example—materially more than the illustrated alternatives. Availability and actual pricing vary, so compare your own options rather than assuming every alternative will be approved.
Frequently asked questions
Can I cancel a payday loan in British Columbia?
Yes. The statutory cancellation period starts when you receive the first advance and runs until the end of the second day the lender is open for business after that date. You must follow the cancellation process and return the amount advanced.
Do online payday lenders need a BC licence?
Yes. Any business offering payday loans to BC consumers must be licensed by Consumer Protection BC, including online or out-of-province lenders.
What is the maximum cost of a payday loan in BC?
The current maximum charges are 14% of the principal, equivalent to $14 per $100 borrowed. The cap includes amounts collected directly or indirectly in connection with the loan.
Can a BC payday lender collect from my employer?
A payday loan agreement cannot give the lender permission to collect a delinquent payday loan from your employer. Separate employment verification may be handled under the consent and privacy terms applicable to the application.
What happens if I cannot pay back my BC payday loan on time?
BC permits default interest of up to 30% per year on outstanding principal and a one-time fee of up to $20 for a dishonoured cheque or pre-authorized debit. Collection or legal action may also follow if the debt remains unpaid.
Official sources and further reading
- Consumer Protection BC — Payday loans
- Consumer Protection BC — The rules for payday lenders in BC
- Consumer Protection BC — Payday lender licence search
- BC Laws — Payday Loans Regulation
- BC Laws — Business Practices and Consumer Protection Act
- Financial Consumer Agency of Canada — Payday loans
Considering a British Columbia payday loan?
Review the cost, repayment date, cancellation right and lower-cost alternatives before you apply. Mr. Payday Easy Loans Inc. is a direct lender serving BC under licence #50031.
Related Mr. Payday resources
BC Payday Loans · Rates & Fees · Borrower’s Rights · All blog articles