In Ontario, the Payday Loans Act, 2008 is the primary law governing payday loans. The General Provisions and Administrative Penalties contain additional rules.
This guide explains many of the direct lender same day approval rules you should follow as a payday lender. You must comply with all requirements of the Act and regulations - not just those summarized in this guide.
If you do not meet all of the requirements, you may lose your license or be subject to other law enforcement measures. Learn more about compliance and law enforcement .A payday loan agreement defines the rights and obligations of the lender and the borrower. It also contains important information for borrowers.
You must ensure that all payday loan agreements contain all of the information set out in section 18 of the General Provisions . For example, you should include:
- information on the rights of borrowers;
- a table on the first page of the agreement which provides information on the cost of borrowing;
- cost of borrowing expressed as a credit rate.
Information should be clear, understandable and easy to see.
As a payday lender, you cannot :
- bill more than $ 15 for every $ 100 advanced, including all costs directly or indirectly related to the payday loan agreement ;
- offer to provide or provide (including on behalf of another person) property or a service related to the loan agreement, such as an insurance policy;
- enter into a payday loan agreement if the advance represents more than 50 percent of the borrower's net salary per loan;
- enter into a payday loan agreement that expires before the day the borrower is expected to earn income (in most cases, this is the date of the borrower's next paycheck);
- extend a payday loan agreement beyond its original expiration date;
- enter into a new payday loan agreement with a borrower who owes you an unpaid balance of the payday loan you made to them - this means that adjustable rate loans are prohibited ;
- use the information contained in a payday loan application, any documentation relating to a payday loan application or the payday loan agreement itself for purposes other than providing a payday loan .
When you enter into a payday loan agreement with a borrower, you must give them a copy of the agreement immediately.
If the borrower requests another copy at any time during the year following the expiration of the payday loan agreement, you must provide it:
- free of charge, if it is the first time that the borrower requests it;
- the day after you receive the request or the next business day.