1. Learn more about what the lender can do

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If you cannot pay back your  on time, the payday lender can charge  starting the day after your payment was due.

Payday lenders can only charge interest on the amount of the original loan that you've not paid back. They cannot charge interest on anything else. For example, they cannot charge interest on the borrowing fee.

Interest can be up to 2.5% each month. This means for every $100 borrowed the interest charged is $2.50 per month. These extra charges can make it harder to pay back the loan.

The lender can also:

  • Let a reporting agency like Equifax and TransUnion know that you‘re late paying back your loan, or,
  • send your file to a collection agency, which is a company that will try to get the money back from you.

If the lender does either or both of these things, it will affect your  and make it harder for you to get loans or credit in the future. For example, it will make it harder to be approved for a new credit card, , mortgage, or car loan.

The lender can also take you to Small Claims Court.

Service fees

Payday lenders usually ask for a preauthorized debit or postdated cheque when giving a loan. If you gave them this, it gives the lender the right to take the loan amount out of your bank account.

If you gave the payday lender a cheque that bounced, or if you did not have enough money in your bank account when they tried to withdraw the money, the lender can charge you a $25 fee. They can only charge you this fee once per loan. It does not matter how many times your cheques bounce or how many times they try to withdraw money from your bank account.

Banks usually also charge a service fee if you do not have enough money in your account when a payment tries to go through. This fee is often called a non-sufficient funds fee or fee. It's usually about $45 for each failed transaction.

If you know you do not have enough money in your bank account when the payment is due, ask the bank if they charge a NSF fee. If they do, explain your situation. Ask the bank to waive the fee or refund it if they've already charged you.

Options that are not allowed

A payday lender cannot take money directly from your wages or ask your employer to repay the loan. This means the lender cannot ask you to sign a or another document that allows them to take your pay.

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