Payday loans

A payday loan is a loan of $1500 or less. The average payday loan in Nova Scotia is about $487.   The money is borrowed for short periods, from a few days to a few weeks. The loan term cannot be more than 62 days.  Privately owned companies offer payday loans in stores and online.

To get a payday loan, you usually give the lender:

• a cheque to cover the loan plus fees, postdated to your next payday; or,
• permission to take the total amount owing out of your bank account on your next payday (this is called pre-authorized debit).

In Nova Scotia, the most a payday lender can charge is $17 for every $100 you borrow, as long as you pay the loan back on time. This is called the maximum 'total cost of borrowing'.  

Your total cost of borrowing is the total amount the loan will cost you if you repay the loan on time.

The cost of borrowing includes:

• interest
• administration fees
• commissions
• cheque cashing fees
• pre-authorized debit fees
• fees for issuing or loading a cash card
• cash card transaction fees
• agent or broker fees.

Whether they are called fees, commission, interest or something else, it all adds to the total amount the loan will cost you.

As of December 1, 2023, the maximum cost of borrowing cannot be more than $17 for every $100 you borrow. 

For example, if you borrow $300, a payday lender cannot charge you more than $51 as the total cost of borrowing. In this example, the most you would be required to repay is $351 if you repay the loan on time. If you do not repay the loan on time, you will be charged interest on the amount you still owe. They can charge you up to 30% interest (annual interest rate) if you pay late. In addition, they can charge a default penalty of up to $40. 

Payday lenders must have a poster in their store or online, giving an example of the total cost of borrowing, like the table below: 

PAYDAY LOANS ARE HIGH-COST LOANS

Example:	$300 loan for 14 days
Principal amount:	$300
Total Cost of borrowing:	$51
Total to repay:	$300 plus $51 = $351
Annual Percentage Rate:	APR = 443.21%

Payday lenders are regulated and licensed by Service Nova Scotia to offer, arrange or give payday loans in Nova Scotia. Lenders must follow the Consumer Protection Act rules and regulations to get, keep or renew a license. They must renew their license every year. Internet payday lenders are also regulated in Nova Scotia and must have a permit from Service Nova Scotia to arrange or provide payday loans online in Nova Scotia.

In certain situations, Service Nova Scotia may refuse to give or renew a license or may suspend or cancel a license.

Call Service Nova Scotia at 1 800-670-4357 or 902-424-5200, or check the Nova Scotia government's online list of licensed payday lenders to find out whether a particular payday lender is licensed to operate here.

Be extra careful with online payday lenders!  Many aren't licensed, aren't located in Canada, and don't follow provincial rules that aim to protect borrowers. You should only use licensed online payday lenders who are located in Canada.

A payday lender must give you the following information:

• the lender's contact information
• contact information for Service Nova Scotia
• the date the loan is made
• the total amount of money you are borrowing
• the total amount you must repay, and when it is due
• if you are paying by instalments, the amount of and due dates of each payment
• details of any fees, charges, commissions, interest, penalties for the loan
• your total cost of borrowing, including interest and other fees
• the maximum cost of borrowing allowed ($17 per $100)
• the annual percentage rate ('APR')
• the interest payable as a percentage rate
• charges you would have to pay if the loan is not repaid by the due date, including the maximum charge allowed ($40 per loan, maximum interest on outstanding balance is 30%)
• any interest payable for extending or renewing the loan
• your rights if the payday lender charges more than they are allowed to charge
• how to cancel your payday loan, including the form to use to cancel
• a copy of your loan agreement.

The information must be clear, easy to understand, and in writing.

You and the lender must both sign your loan agreement. Read it carefully before you sign.

If you get a cash card, the lender must give you the card terms and conditions in writing, including the amount of credit on the cash card and any card expiry date or extra charges for using the card at a place other than the payday lender.

A cooling-off period is an automatic cancellation period where you may reconsider your decision and cancel the contract for any reason without penalty.

Storefront location payday loan:

There is a one-day cooling-off period after signing a payday loan agreement. You may cancel a payday loan any time before the end of business on the day after you get the money or could access the money. This means the next business day. For example, if you get the money on a Friday and the business is closed until Monday, you would have until the end of business on Monday to cancel the loan.

Online payday loan:

You may cancel an online payday loan within 48 hours after you get access to the money.

There is no penalty for cancelling a payday loan within the cooling-off period, and you do not have to give a reason for cancelling.

You may cancel the loan during the cooling-off period without giving a reason and without penalty.

You may also cancel at any time if:

• you were not told about your cancellation rights
• you were not given all of the information the lender is required to give you (see 'Information the lender must give you').

You must cancel the loan in writing and repay any money owed. The lender should have given you a form to use to cancel. You may use that form to cancel the loan or give your own written notice to the lender saying you are cancelling the loan. Delivering it in person and keeping a copy for your records is best.

A payday lender cannot charge a cancellation fee.

Once you cancel the loan in writing and repay any money owing or return an unused cheque or cash card, the payday lender must give you a receipt to confirm that the loan has been cancelled.

If you agree to buy insurance on the loan, and the lender pays the premium, you will also need to pay the pro-rated amount of the insurance premium.

You can repay the full amount of the loan any time before it is due.

A payday lender cannot charge a fee or penalty for early repayment. If a payday lender charges you a fee for early repayment, you can have that fee refunded. Contact Service Nova Scotia if you were charged a fee or penalty for early repayment.

If you have not paid back everything you owe by the due date, you and the payday lender can make a deal to extend or renew the loan, as long as you are only charged interest. A payday lender can charge interest on an extended or renewed loan but cannot add other fees or charges.

 A lender cannot:

• require you to buy insurance to get a loan
• require security for a payday loan (for example, make you sign an agreement that says they can take your car if you can't repay the loan)
• require undated or post-dated cheques for more than you would owe on the due date for repayment, including interest and fees
• give you a new payday loan if you already owe money to them
• set the due date for repayment before your next payday
• charge a penalty or fee if you repay the loan early. You have a right to a refund if you are charged extra for early repayment
• require a wage or other income assignment (for example, make you sign an agreement that says your employer can deduct money from your pay and give it to the lender if you can't repay the loan)
• grant rollovers. A rollover is a second payday loan to pay out an original payday loan which you can't pay or an extension or renewal of your payday loan that adds extra fees or charges other than interest. Extensions or renewals that only charge interest are allowed.

Contact Service Nova Scotia for more information or to make a complaint.

If you cannot repay the loan when it is due, you are in default. 

If you pay late, payday lenders can charge you:
up to 30% interest (annual interest rate) and up to a $40 late payment penalty

If you don't pay back the loan when it is due:

• you will be charged interest on the amount you still owe, including the fees, and this interest will continue to build up. The interest rate will be the amount specified in your loan agreement for default, up to a maximum of 30%
• in addition to the interest, you may be charged a default penalty (fee) of up to $40 
• the payday lender could sell the loan to a collection agency
• the debt could appear on your credit report
• the payday lender could sue you for the debt
• the payday lender could seize your property, if they successfully sue you
• the payday lender could take money from your paycheques (also called garnishing your wages) if they successfully sue you

A payday lender has the right to sue you for the amount you owe, plus interest and any court fees. You should try to speak to a lawyer if you are being sued.  Getting some money management help from a credit counsellor or licensed insolvency trustee is also a good idea.

The payday lender must follow the Consumer Protection Act and Consumer Creditors' Conduct Act rules when trying to collect money from you.

A payday lender cannot:

• make collect calls to you
• contact you if you have written telling them to contact your lawyer
• use documents, notices or letters which are made to look like court forms
• pretend to represent the police or sheriff
• threaten you or use abusive or intimidating language
• harass you or your family, for example, by calling every 15 minutes
• try to collect the debt on a Sunday or any day before 8:00 am or after 9:00 pm
• give misleading or false information to anyone about you, including your employer
• threaten or try to make things difficult for you at work or any of your family members' workplaces
• ask you for or require you to enter into a wage assignment or an assignment of any other kind of income. A wage assignment is a deduction from your paycheque, with the money deducted going directly to the lender.

• If you have questions or a complaint about a payday lender, contact Service Nova Scotia.  Phone: (902) 424-5200 or 1 800 670-4357 (toll-free)
  Website: Service Nova Scotia
• Nova Scotia Utility and Review Board decisions about payday loans: uarb.novascotia.ca, and 2022 decision on payday loans
• Consumer Protection Act and payday lender regulations
• The Financial Consumer Agency of Canada has general information about Payday Loans, debt management help, and about how to find a reputable credit counselling service.
• A financial advisor, credit counsellor, or a licensed insolvency trustee. 
• The Office of the Superintendent of Bankruptcy has information about options you can trust to help you with your debt.