The maximum interest rate in Canada: what the 35% legal limit means
Quick summary
The Criminal Code sets the legal limit on interest at 35% a year (APR). The law calls anything above that a "criminal rate". Some loans, like business loans and pawn loans, have their own limits. Payday loans have a separate federal rule and provincial rules too. Seepayday loan rules by province.
Checked November 3, 2026. Main source: Justice Laws: Criminal Code s. 347 (current to Oct. 19, 2026; s. 347 last amended July 18, 2026). See all 2 sources.
Key facts
- Legal limit
- 35% a year (APR) on the credit advanced
- Source: Criminal Code s. 347, current to Oct. 19, 2026
- Penalty
- Up to 5 years in prison, or on summary conviction a fine up to $25,000, up to 2 years less a day, or both
- Source: Criminal Code s. 347
- Some business loans
- An APR of 48% or less is allowed on business loans over $10,000 and up to $500,000
- Source: Criminal Interest Rate Regulations, SOR/2024-114
- Payday loans
- The regulation caps total cost at 14% of the amount advanced
- Source: SOR/2024-114, in force Jan. 1, 2025
The rule in plain words
Section 347 of the Criminal Code says it is an offence to make or offer a deal that charges interest at a criminal rate, to advertise one, or to collect a payment of it. The rate is criminal if the annual percentage rate (APR) is more than 35% on the credit advanced.
The APR is worked out using accepted actuarial practice. Interest includes all charges and expenses paid or payable for advancing credit, such as fees, fines, penalties and commissions. It does not include repayment of the credit itself, insurance charges, official fees, required deposit balances, or property tax amounts in mortgage deals.
The penalties
| How the case is handled | Penalty in s. 347 |
|---|---|
| Indictable offence | Up to 5 years in prison |
| Summary conviction | A fine up to $25,000, up to 2 years less a day in prison, or both |
Source: Criminal Code s. 347, current to October 19, 2026.
Loans with different limits
The federal Criminal Interest Rate Regulations, in force since January 1, 2025, set special rules for some loans.
| Type of loan | What the regulation says |
|---|---|
| Business or commercial loans to a borrower that is not a person, over $10,000 and up to $500,000 | Section 347 does not apply if the APR is 48% or less |
| Business or commercial loans over $500,000 | Section 347 does not apply, with no APR cap |
| Pawn loans under $1,000 on goods (not vehicles), where the only recourse is the pawned item | Section 347 does not apply if the APR is 48% or less |
| Payday loans | The regulation caps the total cost of borrowing at 14% of the amount advanced. Small provincial charges of $20 or less for a missed payment or a bounced cheque do not count toward the cap |
We did not read how the payday rule fits with each province's own payday law. Use the payday page for the cost limit in your province.
Why APR looks so big on short loans
APR turns a short loan's cost into a yearly rate. As our own example, a $100 loan that costs $14 and is repaid in 14 days works out to 14 ÷ 100 × 365 ÷ 14, which is 365% a year. That is far above 35%, which is why the payday rule is written separately.
What we could not confirm
- How each province's payday law works with the federal 14% rule. See the payday page.
- Whether a specific lender's product is covered. Only a court can decide that.
- The Criminal Code page notes a repealed subsection (7), so older articles may describe the exceptions differently.
Questions people ask
What is the criminal interest rate in Canada?
Interest above 35% APR on the credit advanced is a criminal rate under section 347 of the Criminal Code.
Is the limit 48%?
48% is the APR limit in the regulation for some business loans between $10,000 and $500,000 and for small pawn loans. The general limit is 35%.
Does the 35% limit apply to payday loans?
The federal regulation has a separate payday rule that caps the total cost of borrowing at 14% of the amount advanced. Provinces also set their own payday rules.
What counts as interest?
All charges and expenses for advancing credit, such as fees, fines, penalties and commissions. Repayment of the credit, insurance charges and official fees do not count.
Does your province have its own rules?
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