Criminal Code s.347 — Criminal Interest Rate Refund Demand
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Loan Details + Interest Rate Calculation
Step 1 establishes whether the loan is subject to the 35% APR cap, the 48% APR cap, or no cap. The cap applies based on (a) whether the loan is consumer or commercial, (b) the amount of credit advanced, and (c) the date the loan was entered into or last renewed.
This letter will cite
Criminal Code (RSC 1985 c.C-46) s.347 — criminal rate of interest; reduced from 60% effective annual to 35% APR in force 1 January 2025 (Canada Gazette Pt II Vol 159 No 1, gazette.gc.ca/rp-pr/p2/2025/2025-01-01/html/si-tr4-eng.html); Criminal Interest Rate Regulations (SOR/2024-198); s.347.1 (payday-loan exemption); civil enforcement: agreements at a criminal rate are void as contrary to public policy per Garland v. Consumers' Gas Co., 2004 SCC 25.
Federal — applies in every province + territory. Most enforcement is civil (refund + void interest). Criminal prosecution requires Attorney General consent under s.347(7).
Loans entered into BEFORE 1 January 2025 are grandfathered to the old 60% effective annual rate. Loans entered into ON OR AFTER 1 January 2025 — or renewed/refinanced after that date — are subject to the new 35% APR cap.
Use the APR figure stated in the agreement. If the agreement does not state an APR — only a periodic rate or 'cost of credit' — flag this in the narrative; the criminal-rate analysis still applies to the all-in effective rate.
Section 347 applies to the TOTAL cost of credit — interest, fees, charges, and any benefit conferred on the lender. Use a standard APR calculation including all fees. The Criminal Code uses 'effective annual rate' even though the new cap is expressed as APR; consult a financial advisor for complex products.