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The criminal rate of interest

Canadian law makes it a criminal offence to enter into an agreement to receive interest at a rate that exceeds 35 per cent on the credit advanced, calculated on a defined actuarial basis.

Criminal rate of interest 35% on the credit advanced Department of Justice Canada — Criminal Code, as of 2026-07-21 — Effective annual rate calculated in accordance with generally accepted actuarial practices and principles.
Maximum penalty on indictment 5 years imprisonment Department of Justice Canada — Criminal Code, as of 2026-07-21
Exempt commercial credit: lower threshold more than $10,000 Canada Gazette, Part II — Payday Lending Regulations, SOR/2024-114, as of 2024-06-19
Exempt commercial credit: upper threshold $500,000 Canada Gazette, Part II — Payday Lending Regulations, SOR/2024-114, as of 2024-06-19
Rate ceiling on exempt commercial credit 48% APR Canada Gazette, Part II — Payday Lending Regulations, SOR/2024-114, as of 2024-06-19
Rate ceiling above $500,000 of commercial credit No cap Canada Gazette, Part II — Payday Lending Regulations, SOR/2024-114, as of 2024-06-19 — The Regulations do not apply a rate ceiling to commercial credit above $500,000.

The criminal rate of interest is the outer boundary of what any lender in Canada may charge. It is a criminal provision, not a consumer protection rule, and it applies to agreements to receive interest rather than to a particular kind of lender.

What the section says

The Criminal Code provides that anyone who enters into, or offers to enter into, an agreement to receive interest at a criminal rate — or who advertises such an offer, or receives a payment of interest at a criminal rate — commits an offence. On indictment the maximum is five years' imprisonment.

How the rate is calculated

The Code does not define the criminal rate as a simple annual percentage on the principal. It is an effective annual rate of interest, calculated in accordance with generally accepted actuarial practices and principles, that exceeds 35 per cent on the credit advanced. The calculation aggregates interest together with a defined set of charges, which is why a loan with a modest headline rate and heavy fees can still be tested against the ceiling. The practical consequence is that the number in the advertisement is not the number the section measures.

What is exempt

There are exemptions, and they matter most for commercial borrowing. Under the Criminal Interest Rate Regulations, a commercial loan with credit advanced above $10,000 and up to $500,000 is exempt where the annual percentage rate does not exceed 48 per cent. Above $500,000 in commercial credit there is no rate cap. Pawnbroking loans have their own non-application rules. Payday loans that meet the Code's definition are dealt with by the separate payday lending regime rather than by the general section.

What it means for a borrower

The section is a floor under the whole market rather than a price you should expect to pay. Being under 35 per cent does not make a loan affordable, and it does not make it fair. The useful comparisons for a borrower are the total cost of borrowing and the annualised equivalent of any short-term charge, both of which this site's calculators work out. For regulated lenders, provincial consumer protection law and the rules of the lender's own regulator generally bite well before the criminal ceiling.

Where to complain

Complaints about a federally regulated financial institution go to the Financial Consumer Agency of Canada. Most other lenders are licensed and supervised provincially. A rate that appears to exceed the criminal ceiling is a different matter again: it is a criminal allegation, and the appropriate route is to report it to law enforcement rather than to a consumer regulator.

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