A pre-authorized debit (PAD) lets a biller withdraw money from a bank account under an agreement. Loan and payday-loan providers commonly use PADs for scheduled repayment. The debit authorization is important, but it is separate from the underlying debt.
What a PAD agreement should tell you
FCAC says a PAD agreement should identify the amount and frequency of withdrawals. For variable amounts, the biller generally must provide written notice at least 10 days before the withdrawal unless that notice period is waived or shortened by agreement.
Cancelling a PAD is not cancelling the loan
You can notify the biller in writing to cancel a PAD agreement. However, FCAC emphasizes that cancelling the debit authority does not cancel the contract or erase money you owe. You need another way to make required payments.
Incorrect or unauthorized withdrawals
If a PAD continues after cancellation or is taken on the wrong date or for the wrong amount, contact the biller and your financial institution. FCAC says consumers usually have 90 calendar days from the withdrawal to report an incorrect or unauthorized PAD and request reimbursement through their financial institution.
Borrower checklist
- Keep the PAD agreement and loan agreement.
- Record the authorized amount, frequency and first debit date.
- Watch the account around each scheduled payment.
- Keep written proof of any cancellation.
- Remember that changing payment authorization does not eliminate the debt.
How this connects to your province
Use the Canada Digital Lending Knowledge Center to open your province guide. Provincial pages identify local payday-lending, licensing and consumer-protection sources. Do not assume that a rule described for one province applies unchanged in another.
Related Canadian regulatory topics
- High-Cost Credit in Canada
- Payday Loan Licensing in Canada
- Online Lenders & Loan Apps in Canada
- Canada’s Criminal Rate of Interest
- Cooling-Off Periods for Payday Loans in Canada
- Payday Loan Rollovers & Replacement Loans in Canada
- How to Complain About a Lender in Canada
- Alternatives to Payday Loans & High-Cost Credit in Canada
Primary sources
AppLoans prioritizes government and regulatory sources. This page is educational information, not legal or financial advice. Rules can change; verify current requirements with the applicable regulator.