Car Loan Glossary apr

What is the criminal interest rate limit on car loans in Canada in 2025?

Effective January 1, 2025, the criminal interest rate limit for car loans in Canada is 35% Annual Percentage Rate (APR). This significant amendment to Section 347 of the Criminal Code of Canada lowers the previous threshold of 60% APR, reflecting a federal initiative to enhance consumer protection against predatory lending practices. For any car loan agreement entered into on or after this date, a lender-be it a dealership, bank, credit union, or private financier-charging an effective annual rate exceeding 35% would be committing a criminal offense.

This revised limit provides a crucial safeguard for Canadian consumers, ensuring that even in high-risk lending scenarios, the cost of borrowing for a vehicle remains within a legally defined boundary. It empowers borrowers to identify potentially illegal loan terms and offers recourse against lenders who attempt to exploit vulnerable individuals. While some subprime car loans can carry higher interest rates due to credit risk, legitimate lenders typically operate well below this criminal threshold. Consumers should view 35% APR as an absolute maximum legal ceiling, not a benchmark for acceptable rates, and any offer approaching or exceeding this limit should be considered a serious red flag and reported to the appropriate authorities.
Related Topics: apr law limits

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