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Somebody has quoted you a rate and you are not sure whether it is even allowed. That question has a clear answer in Canada. Since 1 January 2025 the criminal interest rate in Canada is 35% APR, and any loan priced above that ceiling is outside the law unless it falls into one narrow exemption.
Here is what the ceiling covers, what changed in 2025, what it protects you from, and what it deliberately does not do.
What the criminal rate of interest actually is
The Criminal Code sets a maximum cost that can be charged for lending money in Canada. It is a hard ceiling, not a guideline, and it applies to lenders of every size. Charging above it is an offence.
Two things changed on 1 January 2025. The level came down, and the way it is measured changed with it. The old ceiling was a 60% effective annual rate. The new one is 35% APR. That is a substantial tightening at the high-cost end of the market, and it is the reason some lending products that existed before 2025 no longer do.
How the 35% criminal interest rate works in Canada
The ceiling is expressed as an annual percentage rate, so it is measured over a year even when the loan itself runs for weeks. A short loan with a large fee can therefore breach the ceiling easily, because annualizing a big charge over a short period produces a very large number.
This is also why comparing a posted interest rate alone tells you very little. What matters is the all-in cost of borrowing expressed as an annual rate. If you want the mechanics of that calculation, read how APR works and how to compare loan offers.
The one exemption: licensed payday lending
There is a carve-out. Under section 347.1 of the Criminal Code, a loan is treated as a payday loan, and sits outside the general ceiling, when all of these apply:
- the amount advanced is $1,500 or less;
- the term is 62 days or less;
- the lender is licensed in a province designated for that purpose;
- the cost stays within that province's regulated cap.
In provinces with a payday regime, that cap is $14 per $100 borrowed, and the charge for a dishonoured payment is capped at $20 or less. So a licensed payday loan can carry a cost that annualizes far above 35% without being illegal. The exemption is narrow on purpose: small amount, short term, licensed lender, capped fee.
Provinces with a payday lending regime include Ontario, British Columbia, Alberta, Manitoba, Saskatchewan, Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
Where the ceiling is the only rule
Quebec and the three territories have no payday lending regime. There is no designated licensing scheme and no $14 per $100 cap, because the exemption has nothing to attach to. The 35% ceiling applies instead. That is the direct reason the storefront payday model does not operate in Quebec.
If you borrow in Quebec, Yukon, the Northwest Territories or Nunavut, 35% APR is the outer limit on what any lender can charge you.
A worked illustration, using only the legal numbers
The arithmetic below uses the caps themselves. It is an illustration of how the two rules relate, not a price any lender charges.
- Take $500 borrowed for 14 days with the maximum permitted payday charge of $14 per $100. The cost of borrowing is $70, repayable in one payment. As a proportion, that is 14% of the principal in two weeks, which annualizes to roughly 365%.
- Take the same $500 held for three months at the legal ceiling of 35% APR. Simple arithmetic puts the interest near $44, spread across the term rather than due in one day.
The gap between those two figures is the exemption doing its work. Neither number is a quote. For a fuller breakdown of how a small loan is actually priced, see what a $500 loan really costs in Canada.
What the ceiling protects you from, and what it does not
The ceiling stops the most extreme pricing. It does not make a loan affordable, and it is not a quality mark. A loan priced at 34% APR is legal and can still be a bad idea if the payments do not fit your budget.
It also does not regulate everything you might be charged. Late fees, dishonoured payment charges and optional add-ons follow other rules. Read the agreement rather than assuming the ceiling covers it all.
For context on the other end of the market, most lenders under this ceiling still assess you somehow. Lendeca, for example, prices consistently below 29% APR, sets out administration fees in the agreement up front, and does no credit check at all, assessing income and banking activity instead. Its eligibility rule is strict: you must be 18 or older, employed and receiving a regular paycheque from a job, hold an active Canadian bank account in your own name, and not be in an active bankruptcy or consumer proposal. Government and replacement-income benefits do not count as income, including EI, CSST/CNESST, WSIB and other workers' compensation, ODSP and other provincial disability or social assistance. If you are on a benefit right now, that route is not open to you, and the free options below are the better place to start. For what that phrase really covers, see what no credit check actually means in Canada.
Before you borrow at any rate
- Ask your employer whether it will advance earned wages. This is often free.
- Ask the creditor for a payment arrangement before the bill goes past due.
- Ask a credit union about a small-dollar loan; member-owned lenders often price well below the ceiling.
- Book a free session with a non-profit credit counsellor through Credit Counselling Canada, or an ACEF office if you are in Quebec.
If an offer looks like it breaches the ceiling, contact your provincial or territorial consumer protection office. In Quebec that is the Office de la protection du consommateur. They can tell you what applies locally and what to do next. This is general information, not legal advice, so speak to a legal clinic or a lawyer if you think you have been charged unlawfully.
Common questions
Does the 35% ceiling apply to credit cards and bank overdrafts?
The criminal rate applies to lending generally. Mainstream credit card and overdraft pricing sits below it, but the fee structures can still make short-term borrowing expensive, so compare in dollars rather than by rate alone.
Is a payday loan illegal because it costs more than 35%?
No, provided it meets every condition of the exemption: $1,500 or less, 62 days or less, a lender licensed in a designated province, and pricing within that province's cap.
What was the rate before 2025?
A 60% effective annual rate. The new ceiling is both lower and measured as an APR, so the two figures are not directly comparable.
Do fees count toward the ceiling?
The cost of borrowing is broader than the posted interest rate. Ask any lender for the total cost in dollars and the all-in APR, and get both in writing before you sign.
What can I do if I have already paid an unlawful rate?
Keep every document and statement, then contact your provincial consumer protection office and, if the amount is significant, a legal clinic. Do not rely on the lender's own account of what you owe.
The ceiling is a floor of protection, not a recommendation. Knowing where it sits lets you judge an offer on its own terms rather than on how it is presented to you.
