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Can I cancel a payday loan agreement?

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Can I cancel a payday loan agreement?
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Government of Canada
Credit Counselling Canada
Consumer Measures Committee
Financial Consumer Agency of Canada

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Can I cancel a payday loan agreement?
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Reviewed: 
July 18, 2018
Answer

You may be able to cancel your payday loan agreement, depending on when you signed the agreement and if the lender followed the rules.

Within 2 days

You can cancel a payday loan agreement at any time for 2 business days after you signed it. You have till the end of the second day to do this. For example, if you signed the agreement at 11 a.m. on a Wednesday, you have until end of day Friday, when the payday lender closes, to cancel the agreement.

If the payday lender is closed on the second day, you have until the end of the next day they are open after that. For example, if you took out the loan on Friday and they are closed Sunday, you have until the lender closes on Monday to cancel. But if you took out the loan on Saturday and they are closed Sunday, you still only have until Monday to cancel.

This 2-day period is called the cooling-off period. You always have a cooling-off period, even if your loan agreement doesn’t say so.

You don’t have to give a reason for cancelling. You have to return the money you borrowed, but you don’t have to pay any fees or interest.

The payday lender must give you a receipt and return any postdated cheques or debit forms you gave them.

After 2 days

After the 2-day cooling-off period, you can only cancel the loan agreement if the payday lender didn’t follow the rules. For example, if they:

  • didn’t give you a copy of the agreement as soon as you signed it
  • didn’t give you the money as soon as you signed the agreement, if you made the agreement in a store
  • didn’t give you the money within 1 hour, if you made the agreement online or over the phone

You can also cancel your loan agreement if it doesn't have all the information it’s supposed to have.

If the payday lender followed all the rules, you can’t cancel the loan agreement. You have to repay the amount you promised to pay under the agreement. If you can’t repay the loan, you should talk to a non-profit credit counsellor about your options.

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