Personal Loans

Since January 1, 2025, the maximum legal interest rate on a Canadian personal loan is 35% APR — down from the old 60% effective annual rate. Look at the three biggest alternative lenders and you'll notice something odd: easyfinancial tops out at 34.95%, Fairstone at 34.99%, and Mogo at 34.37% — every one of them prices its highest-risk loans within a fraction of a percent of the legal ceiling, not below it by any real margin.

easyfinancial vs. Fairstone vs. Mogo: what the new cap actually changed

Secured options cost considerably less: easyfinancial's home-equity-secured loans run 9.99%–25.99%, and Fairstone's secured loans run 19.99%–25.99% — if you have collateral to offer, that gap is worth pursuing before accepting an unsecured near-35% rate. Mogo's MogoMoney is structured as an open line of credit rather than a fixed installment loan, and it comes with a genuinely useful feature: a 100-day test drive — pay off the full principal within 100 days and Mogo refunds all interest and fees charged up to that point.

Why the cap dropped from 60% to 35% — and who's exempt

Bill C-47 amended Section 347 of the Criminal Code, and the new 35% APR ceiling took effect exactly on January 1, 2025. Violating it is a criminal offence, not a civil one — the Crown can proceed by indictment (up to 5 years imprisonment) or by summary conviction (a fine up to $25,000, up to 2 years less a day in prison, or both). In practice, actual prosecutions under Section 347 have been almost nonexistent for 40 years, due to limited investigative resources and victims' reluctance to report — courts more commonly respond by simply striking the illegal rate clause from a loan agreement rather than pursuing criminal charges.

Two carve-outs matter if you're shopping around: commercial loans over $500,000 are completely exempt from the cap, and payday loans under $1,500 with a term of 62 days or less are exempt under Section 347.1 if issued by a provincially licensed lender in a designated province. Every province except Quebec and the three territories has a designated payday lending regime — Quebec instead enforces its own 35% APR cap directly, with no payday exemption at all.

Payday loan cost cap in designated provinces

For payday loans under the provincial exemption, the federal government caps the total cost of borrowing at $14 per $100 borrowed (not counting default or dishonoured-payment fees of $20 or less). That's a hard ceiling regardless of what a specific province's own payday rules allow — if a lender quotes more than $14 per $100, it's operating outside the federal framework entirely.

What to check before signing

• Ask for the exact APR, not just the monthly payment — a rate advertised as "starting from" almost never applies to subprime borrowers, and near-35% is the realistic outcome for weaker credit.
• Check whether collateral (home equity, a vehicle) would move you into a lender's secured tier — the rate gap between secured and unsecured products at the same company is often 10+ percentage points.
• If you're in Quebec, don't assume payday-loan rules from another province apply — Quebec's flat 35% cap with no payday carve-out is stricter than most of the country.

If your goal is improving your credit profile rather than borrowing a lump sum, compare this against a credit builder loan; if you're juggling multiple existing debts, see our debt consolidation loan guide.

Frequently Asked Questions

Sources: Government of Canada (Order Fixing January 1, 2025, Criminal Code Section 347/347.1), easyfinancial, Fairstone, Mogo official rate pages. Data as of August 2026; lender rates are subject to change and individual creditworthiness.

Update August 2026: what changed since the cap took effect

More than a year and a half into the 35% APR regime, alternative lenders haven't dropped their top rates meaningfully below the cap — the pricing pattern documented at launch (all three major lenders clustering within a point of 35%) has held steady. If you're comparing offers today, treat any unsecured quote noticeably below 30% from a subprime-focused lender as worth double-checking — either your credit profile is stronger than you think, or the "starting from" rate isn't the one you'll actually be offered.

If you were offered a rate above 35%

A quoted APR above 35% on a standard consumer loan is a criminal-rate violation under Section 347, not just a bad deal — Canadian courts have the authority to strike the offending rate clause from the contract entirely. Get the offer in writing before assuming it's a mistake, and if it's confirmed, that's grounds to walk away and report the lender rather than negotiate the number down.