Canada caps the interest a lender can legally charge at 35% per year, expressed as an annual percentage rate. Charging more than that is a criminal offence under the Criminal Code, with a narrow exception for payday loans in provinces that regulate them. The limit dropped from roughly 48% to 35% effective January 1, 2025, following the Criminal Interest Rate Regulations. For anyone comparing loans, this is the outer boundary of what a legal lender can charge, and it is a useful benchmark when an offer looks too expensive.
What the 35% Limit Means
The criminal rate applies to the cost of credit, measured as an annual percentage rate that includes interest and certain fees. If a lender structures a loan so that the true annual cost exceeds 35%, that loan can fall foul of the law. The rule is a ceiling, not a target. Many legitimate loans price far below it, and a loan near the ceiling is a signal to look more carefully at the terms and at your alternatives.
| Concept | What it covers |
|---|---|
| Criminal rate of interest | The legal maximum annual cost of credit, 35% APR |
| Payday loan exception | A separate federal cap of $14 per $100 in provinces without their own regime |
| Provincial payday regimes | Nine provinces set their own licensing, caps, and rules |
| Quebec | Effectively bans payday loans |
Why the Rate Changed
The old threshold had been in place for decades, and critics argued it allowed rates that were far above mainstream credit. The 2024 regulations lowered the ceiling to 35% APR and tightened how the rate is calculated, so lenders cannot hide the true cost in fees. The change took effect on January 1, 2025. It applies to most forms of credit, with the payday carve-out for provinces that license and cap short-term lenders.
What It Does Not Cover
The criminal rate is not a consumer protection code on its own. It does not set the rate you will be offered, does not guarantee approval, and does not stop a lender from charging fees that are legal but still costly. It also does not replace provincial rules on disclosure, licensing, and collections. Think of it as a floor of legality, not a guide to a good deal.
Payday loans are the main exception. Because a $14 fee on $100 over two weeks translates to an annual rate far above 35%, the regulations carve them out and cap them directly instead. That is why payday lending is governed by its own rules rather than by the criminal rate.
What to Do With This Number
- Ask for the APR in writing before you sign, not just the interest rate.
- If a quoted APR approaches 35%, treat it as a warning sign and compare alternatives.
- Check that any payday lender is licensed in your province.
- Report an unlicensed or overcharging lender to your provincial consumer protection office.
- Remember that a legal rate can still be a bad deal if the total cost is high.
Where Provincial Rules Fit
Provinces and territories layer their own consumer protection on top of the federal rule. They license lenders, set payday fee caps, require clear disclosure, and regulate how collectors may contact you. A loan that breaks provincial rules may be unenforceable in part, so it pays to know the regime in your province. When an offer seems to ignore the federal ceiling or provincial licensing, walk away.
Who Enforces the Limit
Enforcement is shared. Federal authorities police the criminal rate, while provincial consumer protection offices license lenders, handle complaints, and enforce their own rules on disclosure and collection practices. If you believe a lender has charged more than the law allows, keep your agreement and payment records, then contact your provincial consumer protection office. For a federally regulated bank, you can also raise the issue with the bank first and, if it is unresolved, with the bank ombudsman. Complaints are more effective when you have the paperwork.
Sources and further reading
- Criminal Interest Rate Regulations (SOR/2024-114), the regulation that lowered the criminal rate to 35% APR.
- Financial Consumer Agency of Canada, for plain-language guidance on the cost of borrowing.
This is general information, not financial advice. Instalment.ca is a loan matching and comparison service, not a lender and not a financial advisor. All loan terms, rates, and fees are set by individual licensed lenders and are subject to credit approval.