Ontario Credit Solutions

The Big Change: Canada's New 35% APR Cap

Before 2025, lenders could legally charge an effective annual rate of up to 60% — roughly 48% APR. That's now history.

As of January 1, 2025, the maximum legal interest rate on consumer loans in Canada is 35% APR. This isn't a guideline — it's the Criminal Code (section 347). Charging more is a criminal offense. So is advertising a rate above 35%.

What this means for you: If you see a personal loan offer above 35% APR, it's illegal. Walk away and report it.

6 Things Your Lender Must Disclose

Under Canada's Cost of Borrowing Regulations, every lender must provide you with clear, written disclosure of the following before you sign:

1. The Annual Percentage Rate (APR)

Not just the interest rate — the APR, which includes interest plus most fees rolled into one number. This is the only apples-to-apples comparison tool you have between lenders.

Why it matters: A loan at 12% interest with a $500 origination fee can cost more than a loan at 14% with no fees. The APR tells the real story.

2. All Fees and Charges

Origination fees, administration fees, insurance premiums, late payment charges — everything. No surprises after you sign.

3. Total Cost of Borrowing

The lender must show you the total dollar amount you'll pay over the life of the loan, including all interest and fees.

Example: A $5,000 loan at 24.99% APR over 36 months costs you $7,217 in total.

4. Payment Schedule

How much you'll pay each month, how many payments, and when they're due.

5. Penalties and Default Terms

What happens if you miss a payment? What if you want to pay off the loan early? The lender must disclose late payment fees, default interest rate, and prepayment penalties.

6. The Information Box

Federally regulated lenders must present all key terms in a standardized information box at the top of your loan agreement.

Your Provincial Protections

British Columbia

2-day cancellation right on payday loans
Payday loans capped at $14 per $100
Lenders must be licensed by Consumer Protection BC

Ontario

Payday loan cost cap: $14 per $100
Maximum dishonoured payment fee: $20
All loan advertising must show the APR

Red Flags

APR above 35% — illegal as of 2025
No written disclosure before signing
Pressure to sign quickly
Fees that weren't disclosed upfront

The Bottom Line

Canadian borrowers have strong legal protections — stronger than ever since the 2025 reforms. Before you sign: confirm the APR is 35% or below, read the information box, know the total cost, and compare at least 2-3 lenders.

Watch: 5 Things Your Lender Must Tell You by Law (60 seconds)

Try it: Personal Loan Calculator — all rates, fees, and terms disclosed upfront.

What Your Lender Must Tell You Before You Sign (Canadian Borrower Rights 2025)