Criminal Interest Rate

Although 'loan sharkingLending money at criminal interest rates' is not the wording used in the Criminal Code, s. 347 makes it an offence to enter into, offer to enter into, or advertise an agreement to receive interestThe aggregate of all charges when advancing credit at a criminal rate, or to receive a payment of interest at a criminal rate. Since January 1, 2025, the criminal rate is an annual percentage rate above 35%, calculated using generally accepted actuarial practices and principles. The offence can apply even if the loan is only offered or advertised and not completed.

According to a Department of Justice (DOJ) document ( A Typology of Profit-Driven Crimes ) loan sharking is when you lend someone money at an interest rate above the criminal rate — an annual percentage rate (APR) over 35% since January 1, 2025. The other characteristic is the unique nature of the collateral the borrower's own person. The DoJ document adds "that would suggest it should be seen as a predatory offence falling into the grey area between legitimate business and criminal activity more typical of commercial crimes."

To show that a loan agreement is loan sharking, the Crown prosecutorA lawyer who conducts a criminal prosecution on behalf of the public. has to prove that an interest rate exceeding the criminal rate was charged — since January 1, 2025 the criminal rate is an annual percentage rate (APR) over 35%. The problem is that people who engage in the practice of being loan sharks generally do not keep detailed record books.

The (DOJ) document A Typology of Profit-Driven Crimes also notes that while loan sharking was the “second most important source of criminal earnings” decades ago, today it is “largely, although not entirely, forgotten.” It adds that unless violence or threat are used, there is not a “clear case for the traditional criminal justice system to take much heed.”

Canadian courts deal with offences in two ways depending on the charge under the Criminal Code. A Summary offenceLess-serious criminal offences is for less serious crimes such as thefts under $5,000, while an indictable offenceA more serious type of Canadian criminal offence. includes murder, sexual assault and aggravated assault. The Crown will decide whether loan sharking will be prosecuted as an indictable offence or by summary convictionLess-serious criminal offences.

If the charge is treated as an indictable offence the maximum penalty is five years in prison. If the charge is prosecuted as a summary conviction, the maximum penalty is a fine of $25,000 and/or two years less a day in jail.

Under s. 347 of the Criminal Code, it can be a criminal offence to enter or offer to enter into an agreement to receive interest at a criminal rate, advertise an offer involving a criminal rate, or receive a payment or partial payment of interest at a criminal rate.

The current Criminal Code definition uses an annual percentage rate, or APR, calculated in accordance with generally accepted actuarial practices and principles. The criminal rate is an APR that exceeds 35% of the credit advanced.

The 35% APR threshold has been in force since January 1, 2025.

Some payday-loan agreements are treated differently under s. 347.1 if the statutory and provincial-law conditions are met. That does not mean all high-cost loans are lawful. It means payday loans have a separate statutory framework.