Canada's Federal Criminal Interest Rate and Payday Loan Cap

Canada's criminal rate of interest is 35% APR, in force since January 1, 2025, and the federal payday loan cost-of-borrowing cap is $14 per $100. Payday loans qualify for an exemption only if they are $1,500 or less, run 62 days or less and are made by a licensed lender in a designated province.

The Criminal Code makes it an offence to enter into or offer an agreement to receive interest at a criminal rate, or to receive interest at that rate. The criminal rate is an annual percentage rate that exceeds 35% on the credit advanced, lowered from the equivalent of about 48% APR and in force since January 1, 2025.

The payday loan exemption

Section 347.1 exempts qualifying payday loans from the criminal rate if the amount advanced is $1,500 or less, the term is 62 days or less, the total cost of borrowing does not exceed the federal limit, the lender is licensed by a province and the province is designated. The Criminal Interest Rate Regulations (SOR/2024-114) set that limit at 14% of the amount advanced — $14 per $100 — and exclude a dishonoured-payment fee of $20 or less from the cap.

What is not a payday loan

The Criminal Code definition excludes guarantees, suretyship, overdraft protection, security on property, margin loans, pawnbroking, lines of credit and credit cards. Those products are subject to the criminal rate rather than the payday exemption.