Alternatives to payday loans
A two-week payday loan can cost more than any other common way to borrow. Before you take one, check whether one of these options covers the gap for less.
Reviewed November 5, 2026 by the 911cash team. Costs are from the Financial Consumer Agency of Canada and the Government of Ontario, listed at the end of this page.
In short
Payday loans in most provinces can cost $14 for every $100 for about two weeks, so borrowing $300 costs $42. The Financial Consumer Agency of Canada found the same $300 for 14 days costs about $6 to $8 on a line of credit, overdraft protection or a credit card cash advance. Asking for more time on a bill or a pay advance can cost nothing. If banks have turned you down, an installment loan spreads a smaller cost over several months instead of taking it all from your next paycheque.
What $300 for 14 days costs
The Financial Consumer Agency of Canada's comparison.
| Option | Cost | Assumption |
|---|---|---|
| Line of credit | $5.92 | 8% a year plus a $5 fee |
| Overdraft protection | $7.42 | 21% a year plus a $5 fee |
| Credit card cash advance | $7.65 | 23% a year plus a $5 fee |
| Payday loan | $42.00 | $14 per $100, about 365% a year |
An installment loan, for comparison
Example for illustration only: a $300 loan at 32% APR over 98 days is repaid in 7 payments of about $44.99, every two weeks. Total repaid: $314.93, so the cost of borrowing is $14.93, spread over more than three months. Some lenders also charge membership fees, which must be included in the total they show you before you sign.
Eight options, cheapest first
- Negotiate the bill. Utilities, phone companies, landlords and card issuers often agree to a short extension or payment plan if you call before the due date.
- Ask for a pay advance. Some employers will advance part of your pay or let you cash in unused vacation days.
- Borrow from someone you trust. Write down the amount and the repayment date, so expectations are clear on both sides.
- Use bank or credit union credit. A line of credit or small personal loan is usually the cheapest borrowing if you qualify. Some credit unions have small-loan programs.
- Overdraft protection. More than a line of credit, far less than a payday loan, as long as it's repaid quickly.
- Credit card cash advance. Interest starts on day one and there's usually a fee, but over a couple of weeks it's still a fraction of a payday loan.
- Installment loan. If your credit keeps you out of bank credit, an installment loan lets you repay over months in equal payments on your pay schedule. It costs more than the options above but avoids a single large repayment.
- Non-profit credit counselling. If you're borrowing to pay other debts, a counsellor can build a budget with you and may negotiate lower payments. Find one through Credit Counselling Canada.
The legal limits
Since January 1, 2025, the Criminal Code caps most consumer loans at a 35% annual percentage rate, including interest and fees. It replaced the old 60% effective annual rate limit.
Payday loans are the exception in the provinces that regulate them: Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Saskatchewan. There the limit is $14 per $100 borrowed. Your province's rules are in our guides by province.
Payday loan rules in Ontario
- No more than $14 per $100 borrowed, all costs included.
- Two business days to cancel, with no penalty and no reason needed.
- No rollovers: no new payday loan until the first is repaid.
- One loan can't exceed 50% of your net pay.
- Three loans in 63 days means the lender must offer an extended payment plan, and you can repay early without a penalty.
- Fees for a bounced payment are capped, and a payment can't be run twice if it causes you bank fees.
- If you're behind, a lender can contact you at most three times a week, never on holidays, and never your family, friends or neighbours.
- Payday lenders must be licensed by the province.
Full list: Payday loan: your rights, Government of Ontario.
Getting out of a payday loan cycle
A cycle starts when repaying one payday loan leaves you short before the next paycheque, so you take another. To break it:
- Stop adding new payday loans. Each one costs up to another $14 per $100.
- Ask your lender for an extended payment plan. In Ontario, they must offer one after three loans in 63 days.
- Replace several loans with one lower-cost loan repaid over months, and don't take new payday loans alongside it.
- Talk to a non-profit credit counsellor, who can negotiate with your creditors for free or at low cost.
Sources
- Financial Consumer Agency of Canada, Payday loans: cost comparison, alternatives and provincial limits.
- Government of Ontario, Payday loan: your rights: Ontario borrower protections.
- Criminal Code, section 347: the 35% annual percentage rate limit.
General information, not financial or legal advice. 911cash is not a lender; the lender that approves you sets its own rate and fees and shows you the full cost before you sign.
Tried the cheaper options?
One application, sent to lenders in our network that offer installment loans to Canadians with bad credit.