Canada
Canada Criminal Interest Rate Cap Explained: What the 35% Limit Means
The ceiling is a criminal-law threshold, not a consumer protection. Know what it does and does not cover.
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- Cap
- 35% APR
- Legal basis
- Criminal Code s.347
- Applies to
- Interest plus certain fees
- Does not cover
- Optional insurance, some penalties
It is a hard ceiling
Charging above 35% APR is a criminal offence. Instalment lenders therefore price just beneath it, which is why 34.99% is everywhere.
The cap includes more than interest
Fees that are effectively a cost of borrowing count toward the 35%. That is why the calculation is not simply the headline rate.
Short terms make the cap bite harder
A 35% APR over three months is modest in dollars; over five years it nearly doubles the principal. The cap protects the rate, not the total.
It does not make a loan cheap
A legal 34.99% loan can still be the most expensive option available to you. Compare against credit unions and lines of credit before accepting.
FAQ
Is 35% a consumer protection?▾
It is a criminal threshold; protection comes from disclosure rules.
Can fees push past 35%?▾
Not if they are costs of borrowing.
What is the cheapest borrowing in Canada?▾
A line of credit or a credit-union loan.
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