Ontario Payday Loan Users Worse Off Than in 2018


One in 10 payday loan shops shuts down, leaving desperate consumers with fewer options.


June 27, 2019

OTTAWA, ON – Ontario’s payday loan users are likely worse off today than before the province capped payday loan interest rates and allowed cities to limit and regulate the location of lenders. A new Cardus report, The Changing Face of Payday Lending in Canada, finds that since the rate caps were introduced in January 2018, one in 10 payday lending shops in Ontario have shut down – all of them small, independent outlets. Several cities have also limited the number of payday loan outlets allowed within their jurisdiction, including Toronto, Ottawa, Kingston, and Kitchener. In most cases, payday loan shops will be limited to one per ward, which will leave big lenders with little local monopolies in the short-term, small-dollar loan market. Meanwhile, credit unions haven’t stepped up to provide better, lower cost alternatives to payday loans, despite the shutdown of so many payday lenders.

“Ontario consumers now have fewer neighbourhood options for emergency loans than before,” says report author Brian Dijkema. “We know from polling Cardus has done with the Angus Reid Institute that 33 percent of Canadians say they’re so socially isolated, they’re not sure they’d have someone to turn to in case of a financial emergency. So, the need for emergency cash remains. While having fewer payday loan storefronts might look better, those desperate for credit might end up more dependent on impersonal and hard-to-regulate online lenders.”

There is also evidence that the lack of competition among payday lenders in Ontario is getting worse. The three biggest such lenders in the province now command 63 percent of the market – up from 57 percent in 2016.

The Cardus report also revealed another significant shortcoming in Ontario’s approach to payday loans: the province has little idea of whether it has actually helped consumers use fewer payday loans. The government hasn’t collected or published any data on consumer behaviour in this regard. 

“Governments have not focused enough on how best to help those who are depending on short-term, high-interest loans,” says Dijkema. “That should be the focus for the future, instead of flashy announcements of policy changes with little to no follow-up to see if new measures actually helped.”

Download The Changing Face of Payday Lending in Canada here.


Daniel Proussalidis
Cardus – Director of Communications
613-241-4500 x508


Cardus is a non-partisan think tank dedicated to clarifying and strengthening, through research and dialogue, the ways in which society's institutions can work together for the common good.