You are about to give a company your banking details and agree to take money out of your next several paycheques. Before that happens, there is a short list of questions to ask a lender that will tell you most of what matters. None of them are rude, and a legitimate lender answers all of them without hesitating.
Below are twelve, grouped by what each one is really testing: the cost, the terms, the process, and the company. Keep them somewhere you can pull up on your phone, and use them on a call, in a chat window, or in an email you can save.
The short answer
Before borrowing in Canada, ask a lender for the APR, the total of payments in dollars, which fees are mandatory, what a missed payment costs, the term in days, the payment dates, early repayment, renewal policy, income verification, credit pull, legal name and licence, and the complaints route. The federal ceiling is 35% APR since 1 January 2025.
The twelve questions at a glance
- Questions 1–4, cost: APR, total of payments in dollars, mandatory versus optional fees, dishonoured-payment charge.
- Questions 5–8, terms: term in days, payment schedule, early repayment, automatic renewal.
- Questions 9–10, process: how income is verified, and whether the credit check is a hard inquiry.
- Questions 11–12, the company: legal name and provincial licence, and the route for complaints.
- The legal ceiling in Canada: 35% APR since 1 January 2025, replacing a ceiling expressed as a 60% effective annual rate.
- The payday exception: section 347.1 of the Criminal Code, requiring all of $1,500 or less advanced, 62 days or less, a licensed lender in a designated province, and pricing inside that province’s cap — commonly $14 per $100.
- What ends the conversation: an upfront fee to release the loan, renewal without you asking, or no dollar total before you hand over banking access.
Four questions to ask a lender about cost
- What is the APR on this loan? The annual percentage rate is the only number that lets you compare two offers on equal footing. Since 1 January 2025 the federal criminal rate of interest is 35% APR, so anything above that on a consumer loan is outside the law. Our explainer on the 35% criminal interest rate covers what that ceiling does and does not protect against, and our guide to comparing Canadian loan offers on APR shows how to line two quotes up.
- What is the total cost of borrowing, in dollars? Ask for principal, cost of borrowing, and the total of payments. If a lender can only answer in percentages or in weekly amounts, keep asking until you get a dollar figure.
- Which fees are mandatory and which are optional? Administration fees are normal and must be disclosed. Optional insurance is optional. If declining an add-on changes your application, that is worth reporting. Our list of loan fees to look for before you sign names the ones that turn up most often.
- What does a missed or dishonoured payment cost? Get the exact charge, and ask what else happens: a late fee, extra interest, a call from collections, or all three. A returned payment can also trigger a charge from your own bank. Our piece on NSF fees in Canada covers how those stack up.
Four questions about the terms
- How long is the term, in days? This is not trivia. A loan of $1,500 or less with a term of 62 days or less meets the payday loan definition in section 347.1 of the Criminal Code and is regulated under a provincial payday regime. Longer terms sit under general consumer credit rules. The consequences are set out in our comparison of payday loans and installment loans.
- How many payments are there, on what dates, and for how much? Ask for the schedule in writing before you sign, and lay it against your own pay dates rather than the calendar month.
- Can I repay early, and does that reduce what I owe? On an interest-bearing loan you stop paying interest for time you no longer hold the money, so clearing the balance early is worth real money. Ask whether a prepayment penalty or a cost fixed at signing applies.
- Is renewal or rollover automatic in any circumstance? The answer you want is no. Anything that extends a loan without you asking should end the conversation. What renewal does to a balance is in our piece on rolling over a short-term loan.
Two questions about how the decision is made
- How will you verify my income, and what do I have to provide? Read-only bank verification and a pay stub with a bank statement are both common. Ask what the connection can see and whether it can move money. Our explainer on instant bank verification covers what a lender sees when you connect an account.
- Will you pull my credit file, and will that show as a hard inquiry? Lenders differ. Ask directly rather than assuming, and get it in writing if the answer matters. The difference between the two checks is set out in our piece on soft and hard credit checks.
Two questions about the company
- What is your legal name, and are you licensed or registered in my province? Match the legal name on the agreement to the brand on the website. In provinces with a payday lending regime you can confirm a licence with the provincial consumer protection office. In Quebec and the territories there is no payday regime, so verification works differently; the Office de la protection du consommateur is the place to ask in Quebec. Our walkthrough on how to check that a Canadian lender is legitimate sets out the order.
- Who do I contact if something goes wrong, and how? A real email address and a real complaints route. If the only channel is a chat widget that vanishes after hours, weigh that.
A worked example: the same $800 priced three ways
Questions one to six produce numbers, and numbers can be checked. The offers below advance $800, priced at a legal ceiling rather than quoted by any real company, so you can redo the arithmetic with your own figures.
Offer A: one payment in 14 days
A payday loan in a province running a payday regime, at the regulated maximum of $14 per $100 borrowed.
- Step 1, the cost of borrowing: $800 is eight units of one hundred dollars, so 8 × $14 = $112.
- Step 2, the total of payments: $800 + $112 = $912, due in one payment on your next payday.
- Step 3, the annualised rate: $112 on $800 is 14% for 14 days. A year holds about 26 such periods, so 14% × 26 is roughly 365% annualised.
That figure is lawful, because a loan meeting every condition of the payday exemption is priced by a provincial fee cap rather than by a rate. An APR answer only means something once you know which regime the loan sits in.
Offer B: twelve bi-weekly payments
The same $800 over twelve bi-weekly payments: 168 days, outside the payday exemption and under the 35% APR federal ceiling. Priced at that ceiling:
- Step 1, the period rate: 35% for a year is about 1.34% per fourteen-day period (35 × 14, divided by 365).
- Step 2, the payment: $800 amortised over 12 periods at 1.34% gives $72.63.
- Step 3, the first payment split: $800 × 1.34% = $10.74 of interest, so $61.89 comes off the principal, leaving $738.11.
- Step 4, the total of payments: 12 × $72.63 = $871.51, of which $71.51 is the cost of borrowing.
Offer B costs $40.49 less than Offer A, $871.51 against $912, and takes $72.63 out of each paycheque rather than $912 out of one.
Where the lower APR costs more
Now Offer C, from a lender quoting below the ceiling: $800 at 30% APR over twelve monthly payments.
- The period rate: 30% for a year is 2.5% a month.
- The payment: $800 amortised over 12 monthly periods at 2.5% gives $77.99.
- The total of payments: 12 × $77.99 = $935.88, of which $135.88 is the cost of borrowing.
Offer C carries the lowest APR of the three and the highest dollar cost: $135.88 against $71.51 for Offer B, and $23.88 more than the payday loan. Nothing is wrong with the rate. The money is held more than twice as long as under Offer B, and interest is rent on time.
That does not make Offer A the winner either. $912 out of one paycheque is the hardest of the three to survive, and a payment you cannot meet is what turns a one-off cost into a rolled-over balance. APR is the price per unit of time, the total of payments is what the deal costs, and the schedule decides whether you can pay it.
How to score the answers you get
Twelve answers are a lot to hold in your head during a call. Work down this list in order and stop at the first line that fails.
- Did you get a dollar total? Principal, cost of borrowing, total of payments. No dollar total, no decision.
- Do the payment dates fall after your pay dates? A payment landing the day before your pay is a dishonoured payment waiting to happen.
- Is the term more than 62 days, and does the lender know the number? A lender who cannot state it in days has no grip on which rules apply.
- Is the APR at or under 35%? Above that, outside the payday exemption, the loan is outside the law as it has stood since 1 January 2025.
- Are the mandatory fees named, and inside the quoted total? A fee disclosed but excluded from the total is a fee you meet later.
- Is renewal something you have to ask for? Automatic renewal turns a fixed cost into an open-ended one.
- Does the legal name on the agreement match the brand you applied to? If not, ask why before signing.
- Is all of it in writing? An emailed summary you can save is enough. A verbal assurance is not.
Every line passing means a decision rather than a guess. One failing gives you something specific to ask about.
Red flags that should end the conversation
- An upfront fee to release the loan. A legitimate lender is paid out of the loan or the payments, never by a transfer from you before any money arrives. A demand for a fee or gift card to unlock funding is the clearest sign of a scam.
- Guaranteed approval or instant approval. No lender can promise approval before looking at your income and your account, so the claim is either untrue or a sign that approval is not the product being sold.
- Pressure to decide now. Countdown timers, an offer expiring in an hour, a representative who will not let you hang up. Urgency is a sales technique, used hardest where the numbers do not survive scrutiny.
- A request for your online banking password rather than a read-only connection. Ask what the verification can see and whether it can move money.
- No legal name anywhere. Not on the website, not in the agreement, not in the email footer. A company that will not say who it is cannot be complained about.
- A cheapest or best claim with no numbers behind it. Ask for the total of payments and check.
Two questions to ask yourself first
Before any of the twelve, answer two of your own. What exactly is the money for, and what income repays it? A short-term loan works when there is a defined one-off expense and a paycheque already scheduled to cover the payments. It is the wrong tool for a standing gap between monthly income and monthly costs, because it adds a payment to a budget that already does not balance.
If the answer is uncomfortable, work through the cheaper routes before you borrow:
- Ask your employer about a pay advance or early access to wages you have already earned.
- Ask the creditor directly for a payment arrangement. Utilities, dentists, garages and municipalities often agree to instalments if you ask before an account goes to collections.
- Ask a credit union about a small-dollar loan or a low-cost overdraft.
- Book a free session with a non-profit credit counselling agency through Credit Counselling Canada, or an ACEF office if you are in Quebec.
- Start the habit of building a $500 buffer when your pay is not the same every week, which is what keeps the next surprise from becoming a loan.
Who to call if a lender will not answer
Named bodies in Canada will answer some of these questions for you, and asking costs nothing.
- Your provincial or territorial consumer protection office: licensing, the payday rules where you live, and complaints about a lender in your province. In Quebec, the Office de la protection du consommateur.
- The Financial Consumer Agency of Canada: the federal body for consumer matters at federally regulated financial institutions.
- Equifax and TransUnion: the two Canadian credit bureaus, where you check what a lender recorded on your file.
Ask before you sign rather than after, and write down the legal name, the date and what you were told.
What good answers sound like
You are listening for three things: specific numbers, willingness to put them in writing, and no pressure. Vague answers, a refusal to disclose total cost before you apply, a demand for an upfront fee to release a loan, or a push to decide immediately are all reasons to stop.
For reference, a Lendeca loan runs from $250 to $1,500 with up to 12 weekly or bi-weekly payments timed to your pay cycle, a term always longer than 62 days, an APR consistently below 29%, administration fees written into the agreement before signing, and no automatic renewal. Qualifying requires being at least 18, being employed with a regular paycheque from a job, holding an active Canadian bank account in your own name, and not being in active bankruptcy or under a consumer proposal. Benefit income does not qualify, which includes EI, CSST or CNESST, WSIB and other workers’ compensation, ODSP and other provincial disability or social assistance. Those are the sorts of answers the twelve questions are designed to produce from anyone you are considering.
Common questions
Is it normal to ask a lender all of this before applying?
Yes. Cost of borrowing disclosure is a legal requirement in Canada, and asking for it early is ordinary consumer behaviour, not a red flag on your file. Questions asked before an application are a conversation, not a credit event, and none of it is recorded where a future lender can see.
What if the lender will not answer until I complete an application?
Ask anyway for the APR, the fee schedule and a sample payment plan, because all three exist before an application does. If none is available before you hand over banking access, treat that refusal as an answer and take the twelve questions elsewhere.
Should I ask about a licence even for an online lender?
Ask. Licensing depends on the product and the province, not on whether a lender has a storefront. Payday lending is licensed in provinces with a payday regime, while other consumer credit falls under general provincial rules. Your provincial consumer protection office can say which applies.
What is the maximum interest rate a lender can charge in Canada?
35% APR, since 1 January 2025, when the federal criminal rate of interest replaced a ceiling expressed as a 60% effective annual rate. The one exception is a loan meeting every condition of the payday exemption in section 347.1 of the Criminal Code, priced instead by a provincial fee cap, commonly $14 per $100 borrowed.
What does total cost of borrowing mean?
The total cost of borrowing is everything repaid above the amount advanced: interest plus every mandatory fee, across the life of the loan. On a loan of $800 repaid at $871.51, the total cost of borrowing is $71.51. Stated in dollars, it cannot be reframed by changing the term.
How much can a lender charge if my payment is dishonoured?
In provinces that run a payday lending regime, the charge a payday lender may apply for a dishonoured payment is capped at $20. Other consumer credit is governed by the agreement and general provincial rules, so ask for the figure in writing. A separate charge from your own bank, typically in the range of tens of dollars, can apply on top.
Which questions matter most in Quebec or the territories?
Questions five and eleven. Quebec, Yukon, the Northwest Territories and Nunavut run no payday lending regime, so the section 347.1 exemption has no designated licensing scheme to point at and the 35% APR ceiling applies regardless of term. In Quebec, the Office de la protection du consommateur is the body to ask about a lender.
Can I qualify if my income is EI, WSIB or a disability benefit?
Not for a loan requiring employment income. Qualifying for one of those requires a regular paycheque from a job, an active Canadian bank account in your own name, being at least 18, and no active bankruptcy or consumer proposal. EI, CSST or CNESST, WSIB and other workers-compensation benefits, ODSP and other provincial disability or social assistance do not qualify.
What is the single best question of the twelve?
The total of payments in dollars. It is hard to answer misleadingly, it captures interest and mandatory fees in one figure, and it makes the whole deal concrete. If a lender will give you only one number before you apply, insist on that one, in writing.
Ask the twelve. If the answers are clear and the numbers work against your pay dates, you are making a decision rather than a guess.
