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New Federal Law Lowers Criminal Interest Rate
February 15, 2025
New Federal Law Lowers Criminal Interest Rate
Effective January 1, 2025, the federal government changed the law to lower the federal criminal interest rate to 35% annual percentage rate (APR), which equals about 42% effective annual rate (EAR) down from the previous EAR of 60% (equal to roughly 48% APR). These changes make it a criminal offence to offer loans at any interest rate above 35%, with some exceptions.
3 exemptions remain:
- commercial loans,
- pawnbroking loans, and
- payday loans.
The amendments broaden the scope of activities covered by the criminal interest provision, now including offering or advertising credit at criminal rates, not just entering into an agreement.
The new criminal interest rate does not apply to agreements made before the amendments came into force. Loans that complied with the previous laws when originally entered into are unaffected by the changes. However, clients should seek legal advice when modifying such agreements to ensure continued compliance with the new laws. Lenders and brokers should be aware of these changes and take the time to learn their responsibilities under the new rules. Violations can result in fines of up to $25,000, or imprisonment of up to 5 years.
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Aman Bindra and his team assist clients with all real estate, banking, and business matters, including purchases and sales of real estate and businesses, borrowing and lending, land development and construction, and leasing.
Aman has extensive experience working with individual, business and corporate clients throughout British Columbia. He regularly advises on and prepares agreements relating to land, asset, and share purchases, financings, and construction projects, and he assists with leasing, incorporations, partnerships, corporate reorganizations, and more.
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