Criminal Interest Rate amendments

The federal government’s criminal interest rate amendments come into effect on January 1, 2025.

Under these amendments, the criminal interest rate is lowered from a 60% effective annual rate (EAR) to a 35% annual percentage rate (APR).

The measure of interest will change from the EAR to the APR as calculated under generally accepted actuarial practices and principles.

This does not apply to the payment of interest arising from an agreement entered into before the day the changes take effect.

The amendments and the Criminal Interest Rate Regulations: SOR/2024-114 outline exemptions from the application of the new criminal interest rate provisions for certain:

• commercial loans; and
• pawnbroking loans.

The commercial loan exemption applies when the borrower is not a natural person, and the loan is made for business or commercial purposes for an amount between $10,000 and $500,000 and charges an interest rate no higher than 48% (APR).

Commercial loans over $500,000 are also exempt and are not subject to the 48% interest rate cap (APR).

The pawnbroking loan exemption applies to loans in exchange for tangible personal property or moveable property, other than a vehicle, under $1,000 with an interest rate no higher than 48% (APR).

By Lawyers publications have been updated to reflect these significant legislative changes.