How the maximum borrowing costs are set in Canada
The maximum borrowing costs a lender may charge in Canada come from two layers of law. The federal government sets a general ceiling on interest through the Criminal Code, while provinces regulate payday lending and licence consumer lenders. Which limit applies to you depends on the type of loan, its size and the province where you live.
Because the layers overlap, a loan can be legal under one rule and still be a poor deal. The limits below describe the ceiling. They do not describe what a fair price looks like, and many licensed lenders charge less than the maximum.
Who enforces what
The Criminal Code is enforced by police and prosecutors, so a complaint about a rate above 35 per cent is a matter for law enforcement as well as for consumer offices. Provincial regulators handle licensing, complaints about fees and disputes over cancellation. The Financial Consumer Agency of Canada supervises federally regulated banks and publishes consumer information, but it does not license payday lenders.
The federal ceiling: the criminal interest rate
On January 1, 2025, the criminal interest rate fell to 35 per cent, calculated as an annual percentage rate. It previously stood at 60 per cent effective, equal to about 48 per cent annual percentage rate. Charging above the new figure can be a criminal offence under section 347 of the Criminal Code, although the text of the provision itself should be read on the Justice Laws website.
Loans outside the ceiling
Commercial loans, pawn loans and payday loans are exceptions. Payday loans fall under provincial rules instead, which is why the effective annual cost of a short loan can far exceed 35 per cent.
Older agreements
The reduced ceiling does not apply to payments under agreements made before January 1, 2025.
Why the ceiling was lowered
The lower federal limit aims to curb the most expensive consumer credit. Its effect depends on how lenders respond, and some products remain outside it. A borrower facing a rate above 35 per cent on an ordinary instalment loan made after the change date should ask the lender to justify it, then consider contacting a consumer office.
Payday loans: the provincial price cap
Nine provinces regulate payday lending and set the ceiling at $14 for every $100 borrowed, according to the Financial Consumer Agency of Canada: Saskatchewan, Ontario, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, New Brunswick, Manitoba, British Columbia and Alberta. The agency adds that a payday loan is limited to $1,500 and 62 days.
Where no province-specific scheme exists, including the territories and Quebec, the practical limit is the 35 per cent criminal rate. A 14-day, $300 loan costs $42 at the regulated cap, which the agency compares to about 365 per cent annually.
What the cap includes
The cap is meant to cover the entire cost of the loan, so a lender should not add separate administration, processing or membership charges that push the total above $14 per $100. If the contract shows several line items, add them up yourself and compare the sum to the cap.
Why a cap is not a bargain
Fourteen dollars per hundred over a fortnight works out to the 365 per cent annual figure the federal agency cites. Lenders are permitted to charge it, yet it sits at a very different level from the 35 per cent ceiling that applies to ordinary loans. That gap explains why the consumer agency urges people to explore alternatives first.
Province-by-province snapshot
| Province or territory | Body to contact | What to know |
|---|---|---|
| British Columbia | Consumer Protection BC | Licence needed, including for lenders based outside the province; fee ceiling of $14 per $100 on loans made on or after January 1, 2025; two-business-day cancellation |
| Alberta | Service Alberta and Red Tape Reduction | Payday lenders must hold a licence; the $14 per $100 ceiling dates from January 1, 2025 |
| Saskatchewan | Financial and Consumer Affairs Authority | Licence required; the regulator's page cites a figure of $17 per $100, while federal sources say $14, so confirm the current number |
| Manitoba | Consumer Protection Office | $14 per $100; 48-hour cancellation; $1,500 and 62 days maximum |
| Ontario | Ministry of Public and Business Service Delivery | $14 per $100; two-business-day cancellation; maximum of 50 per cent of net pay |
| Nova Scotia | Service Nova Scotia | $14 per $100; late fee capped at $20; permit required |
| Quebec | Quebec consumer protection office (OPC) | No separate payday scheme; 35 per cent ceiling; a money-lender permit is required |
| Territories | Territorial consumer services | No specific payday regime according to the federal agency |
A lender that does not appear to be licensed in a province that requires it is a red flag. Look the business up with the body in the second column before you share your banking details.
Other limits worth knowing
- Share of income. Ontario, British Columbia and Saskatchewan limit a payday loan to 50 per cent of net pay.
- One loan at a time. British Columbia and Saskatchewan restrict having multiple payday loans, and British Columbia bars rollovers.
- Late-payment interest. Saskatchewan caps overdue interest at 30 per cent annually and non-sufficient-funds charges at $25. Nova Scotia allows up to 30 per cent on an unpaid balance.
- Cancellation windows. Windows range from 48 hours to two business days in the provinces we reviewed.
These details come from provincial government pages and the federal agency. Some provinces, including New Brunswick, Prince Edward Island and Newfoundland and Labrador, could not be confirmed from their own official pages, so check with the provincial office before relying on specifics.
A worked illustration
Suppose you borrow $800 for two weeks in a regulated province. At $14 per $100 the maximum fee is $112, so the most you would owe is $912. If the lender also added a charge on top that pushed the total above that figure, the extra amount would be worth questioning. In Ontario, the loan could not exceed half of your net pay for the period, so a net pay of $1,200 would limit the loan to $600.
Making use of the limits as a borrower
A legal ceiling gives you leverage. If a charge on your statement looks higher than the cap for your loan type, ask the lender to explain it in writing. If the answer is unclear, contact your provincial consumer protection office and keep copies of the contract and every payment record.
Remember that the cap can still produce an expensive loan. A fee of $14 per $100 repeated every two weeks adds up quickly, so treat the maximum as a warning level and not as a reasonable price. Non-profit counsellors can explain lower-cost choices, and a licensed lender can show the total repayment before you sign.
This overview is general information, not legal advice. Laws are amended, so confirm the current rule with the regulator.
If you think a lender broke the rules
Gather the signed agreement, proof of payments and any messages. Write to the lender and describe the issue plainly, giving it a reasonable deadline. If it does not respond, contact the provincial office listed in the table. Keep paying what is clearly owed under the contract while the complaint is open, since stopping payment can hurt your credit report. A legal clinic can advise on larger disputes.
Remember also that licensed lenders must display certain information, and that unlicensed online operators sometimes ignore provincial rules altogether. In British Columbia, a licence is required even for lenders located outside the province, a reminder that borrowing online does not remove local protections.