If you have bad credit, a low income, or other financial problems that would get you denied for financing through your bank, a payday loan is an easy but expensive way to access $100 – $1,500 in fast cash. These loans come with high-interest rates of around 300% to 600% APR, as well as short payment terms of 14 days. Typically, you’ll need to repay the full loan, plus interest and fees all at once.
Now that you know what these products are, you may be wondering if you can have two payday loans at the same time. Keep reading to find out if that’s a possibility in Canada.
In most provinces, you can’t apply for a second payday loan, from the same lender or a different lender, before you’ve paid off the full balance of your first.
This is usually because the provincial government has imposed laws that prevent lenders from offering “rollovers”.
A rollover (also called a renewal) is when what owe from your first loan is combined with or rolled into a second loan. Thus, on your next due date, you will owe the amount from your first loan and your second loan, creating what is called the payday loan cycle of debt.
As of 2022, six out of ten provincial governments have completely outlawed payday loan rollovers and extensions:
As you can see, payday loans come with some serious downsides, especially when you have more than one. So, if you need access to credit, there are other credit products you can qualify for, including:
If you have a credit card, you may be able to take out a cash advance at an ATM. Although you’ll have to pay a $20 – $30 fee and 19% – 24% interest daily. While this could be a viable option for a small amount of cash, it can end up being just as expensive as a payday loan in the long run.
Many alternative lenders can also offer you a more traditional installment loan, even if your finances and credit aren’t great. Terms are often flexible (several weeks, months or years) and rates vary from 8% to 47%.
Some bank accounts allow you to withdraw more money than your actual balance. You can opt to add overdraft protection to your account if offered by your bank. Most overdraft protection has a monthly fee or a per-use fee, for example, $5. Furthermore, you’ll typically be charged a set daily interest rate on the amount you overdraw. Overdraft protection and fees vary greatly depending on the bank.
You could also consider a vehicle title loan. This is where your vehicle is used as collateral to secure the loan. While this can be an expensive option, it is more affordable than a payday loan and you’ll benefit from installment payments.
Yes, if you pay off the full balance of your first loan and wait an appropriate amount of time before applying again, most lenders will gladly approve you for a second payday loan. That said, there are a few things you should do before you apply again, such as:
In most provinces, taking out a second payday loan or having your first one rolled over into a second one is illegal. It’s unlikely that you will get a second payday loan from your original lender because you’re already in their system. It’s possible you may get a second loan from a different lender if they don’t bother to check whether or not you already have a payday loan.
No matter the reason, there are a number of things you should do if you somehow manage to acquire two payday loans at the same time, including but not limited to:
Despite the fact that rollovers are permitted in some regions of Canada, it’s important to remember that payday loans can cause severe debt problems when used irresponsibly. Taking on more than one payday loan is never a good idea.
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Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.
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