An installment loan is repaid in fixed amounts on a fixed schedule, rather than in a single payment. That one structural difference is most of what separates it from a payday loan, and it is the reason the numbers on this page look the way they do.
How an installment loan works
You receive the full amount at the start. You then repay it in equal installments — typically bi-weekly, timed to your pay cycle — until the balance and the cost of borrowing are cleared.
Each payment does two things: it covers the cost of borrowing accrued since the last one, and it reduces the principal. Because the principal falls with every payment, the cost portion of each payment falls too. By the final payment you are paying almost entirely principal.
A payday loan does not work this way. It is one lump sum, principal and fee together, usually due on your next payday. Nothing is repaid gradually, so nothing gets cheaper along the way, and the whole amount has to be available at once — which is what makes rollovers common.
What it costs
Partner lenders set the rate, which ranges from 22% to 32% APR depending on the risk score of the application. The examples below use 32%, the top of that range, so nothing here understates what you might be asked to pay.
| You borrow | Payments | Total repayable | Cost of borrowing |
|---|---|---|---|
| $300 | 7 payments of approximately $44.99 | $314.93 | $14.93 |
| $1,000 | 7 payments of approximately $149.98 | $1,049.86 | $49.86 |
| $3,000 | 7 payments of approximately $449.93 | $3,149.51 | $149.51 |
Each of these is a bi-weekly schedule over 98 days. Figures include all membership fees as well as interest and capital.
Where each payment goes
Because the balance falls with every payment, the cost portion shrinks and the principal portion grows. This is the $1,000 loan above, payment by payment:
| Payment | Cost of borrowing | Principal repaid | Balance remaining |
|---|---|---|---|
| 1 | $12.31 | $137.67 | $862.33 |
| 2 | $10.62 | $139.36 | $722.97 |
| 3 | $8.90 | $141.08 | $581.90 |
| 4 | $7.17 | $142.81 | $439.08 |
| 5 | $5.41 | $144.57 | $294.51 |
| 6 | $3.63 | $146.35 | $148.16 |
| 7 | $1.82 | $148.16 | $0.00 |
The first payment costs $12.31 to borrow; the last costs $1.82. Nothing is owing at the end — there is no balloon payment and no renewal required. Across all seven, the cost of borrowing totals $49.86.
This is also why paying early is cheaper: the cost accrues on whatever is still outstanding, so clearing the balance sooner means less of it accrues at all.
Fees, if something goes wrong
Two further fees apply only if something goes wrong. Partner lenders charge $50 for a payment returned for non-sufficient funds, and $35 to reschedule a payment and extend the plan. Both are set out in full on the loan terms and borrowing example page.
Amounts and terms
Loans range from $300 to $3,000, repaid over 90 to 120 days. Longer terms are available on larger amounts.
Payment frequency is usually bi-weekly and aligned to your pay dates, so the money leaves your account when it arrives rather than between deposits. Weekly, semi-monthly and monthly schedules are also possible depending on the partner lender.
What you can borrow depends on what your banking history supports. The partner lender sets the final amount, not 514loans.
How this compares to a payday loan
A payday loan in Canada typically costs around $15 per $100 borrowed over 14 days. On $300, that is roughly $45 in fees for two weeks — more than the $14.93 an installment loan of the same size costs across 98 days in the table above, and due in a single payment rather than seven.
Expressed as an annualised rate, payday lending sits around 390%, against 22% to 32% here. The comparison is set out in more detail on our installment loans versus payday loans page, and the alternatives more broadly on payday loan alternatives.
When an installment loan is the right tool
It fits a known, one-off cost that you can repay from income over about three months — a car repair that gets you back to work, a bill that will otherwise go to collections, a deposit with a deadline. The value is that the repayment is predictable and finite.
It is a poor fit in two situations, and both are worth being honest about:
- When the shortfall is ongoing rather than one-off. If income does not cover regular expenses, borrowing moves the problem forward and adds to it.
- When it is being used to pay other debts. Consolidating what you already owe into a single payment is often cheaper than adding another obligation — see credit consolidation. If your debts are beyond that, a non-profit credit counselling agency or a Licensed Insolvency Trustee will assess your options at no cost and without lending you anything.
How applying works
514loans is not a lender and does not make lending decisions. We match your application with partner lenders in our network, and a partner that accepts it contacts you directly, provides the loan and services it for the full term.
There is no credit check. Partner lenders verify income through Internet Banking Verification instead, which is why applying leaves no mark on your Equifax or TransUnion file. The qualifying criteria and what lenders look at in place of a score are set out on our bad credit loans page, and the baseline requirements on loan requirements.
Common questions
Can I pay the loan off early?
Yes. Paying early reduces the cost of borrowing, because the cost accrues on the outstanding balance — clearing it sooner means less of it accrues. Contact your partner lender directly, since the agreement is with them.
What happens if a payment does not clear?
The partner lender charges $50 for a payment returned for non-sufficient funds, and your bank may charge its own fee on top. If you know in advance that a payment will not clear, rescheduling it costs $35 and is the cheaper option.
Can I change my payment date?
A payment can be rescheduled for a $35 administration fee, with at least three business days’ notice. There are limits: the first payment cannot be rescheduled, two payments in a row cannot be, and no more than two per loan term.
Is an installment loan the same as a payday loan?
No. A payday loan is one lump sum due on your next payday. An installment loan is repaid gradually in fixed payments over 90 to 120 days, which is why the cost of borrowing is a fraction of the payday equivalent.
Who do I deal with once the loan starts?
The partner lender that accepted your application. They set the rate within the range above, take the payments, and handle any changes to the schedule. 514loans is not party to the agreement.
Does applying affect my credit score?
No. There is no credit check, so there is no hard inquiry and no effect on your score from applying.
Start an application to see what a partner lender will offer, or read the full terms and a worked example first.