How much would a $500 payday loan cost?

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Borrowing a $500 payday loan in Canada will cost you $570 due to a $14 fee for every $100 borrowed. This fee applies across several provinces, keeping the total repayment amount the same. However, these loans can have an APR of 350%! Watch out for extra fees on missed payments. Consider alternatives like credit card cash advances or personal loans, which might offer better terms. Got questions? Reach out via phone, text, or live chat anytime!

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Payday Loan Cost Question

How much would a $500 payday loan cost? I want to get a sense of how much interest or fees I’d have to pay if I take out a $500 payday loan.

From: Anonymous Question
Location: Winnipeg, Manitoba (MB)
Category: debt management plan

Payday Loan Cost Answer

Borrowing a $500 payday loan in Canada will set you back $570. Why, you ask? The $14 fee per $100 borrowed explains it all. Do the math—$14 times 5 equals $70 in fees added to your original amount, making it $570 in total to pay back. This holds across provinces like Ontario, British Columbia, Alberta, Manitoba, and Newfoundland and Labrador, thanks to newly aligned fee caps. Quebec, though a bit different in fee calculations, ends up with the same repayment amount for this example.

Here’s where it gets a bit tricky: the annual percentage rate (APR) on payday loans can skyrocket to around 350%—yikes! This is due to their short-term nature. And don’t forget that bounced payments might bring in extra fees from $20 to $40. As for alternatives, consider a credit card cash advance or a personal loan, which often offer more manageable interest rates and flexible terms. Payday loans and very dangerous and should be avoided at all costs. Got questions? Drop us a line anytime—whether it’s by phone, text, or live chat—because we’re here to help!

From: Insider Adam

Office of the Superintendent of Bankruptcy (OSB) Answer

A $500 payday loan in Canada can cost significantly more than the principal amount due to high-interest rates and fees. According to the regulations found in the Criminal Code of Canada, the maximum allowable cost of borrowing on a payday loan is typically $15 per $100 borrowed per pay period. Therefore, for a $500 loan, this would equate to a total cost of:

• $15 x 5 (for the $500 loan) = $75

If the loan is for one pay period and is paid back on time, the total repayment amount would be $575. If it is rolled over or extended, the costs could increase further, compounding the total amount owed. This is detailed under the Criminal Code, section regarding payday loans, where regulations stipulate maximum fees.

From: OSB Helper

Related Questions to Payday Loan Fees

Here are the top 5 most frequently asked questions related to the cost of a $500 payday loan, based on current trends and concerns:

1. What is the maximum cost of a $500 payday loan?

• The maximum cost would be $570, given the new cap of $14 per $100 borrowed[2].

2. How much interest can I be charged on a $500 payday loan?

• You can be charged up to $70 in fees, which translates to an APR of around 350%[2].

3. What are the additional fees for a $500 payday loan if I can’t pay on time?

• Additional fees can include a fee for a dishonored cheque or pre-authorized debit (up to $25), NSF or overdraft fees from your bank, and potential additional interest on the unpaid debt[1].

4. How does the new $14 per $100 cap affect the cost of a $500 payday loan?

• The new cap means you will pay no more than $70 in fees for a $500 loan, making the total cost $570[2].

5. Can payday loan costs vary by province for a $500 loan?

• While the new national cap sets a standard of $14 per $100, previous variations by province are now standardized under the new federal regulations[2].

If you have a question about debt see our debt questions or ask your own debt related question.

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