Yes, it is legal to lend money with interest in Canada, provided the annual interest rate does not exceed the criminal rate of 60% of the credit advanced. As of January 1, 2025, the maximum allowable interest rate has been lowered to 35% APR (annual percentage rate) on most loans. The rate must include all fees and penalties.
The Criminal Code makes it an offence to: (1) enter into an agreement or arrangement to receive interest at a rate exceeding 60 per cent; and, (2) actually receive interest at a rate exceeding 60 per cent.
You can lend money at interest, provided that the interest rate falls within the appropriate legal guidelines. Most states have usury laws that limit the maximum amount of interest that a lender can charge. In addition, you should also consider the Applicable Funds Rate prescribed by the Internal Revenue Service (IRS).
Put your agreement in writing
Each province in Canada has specific regulations governing the maximum allowable interest rates and fees that private lenders can charge. Comparing private mortgage rates with traditional lenders' rates can help borrowers understand the cost differences and make informed decisions.
Current Private Mortgage Rates in Canada 2026:
The Basic Rate: The California Constitution allows parties to contract for interest on a loan primarily for personal, family or household purposes at a rate not exceeding 10% per year. Note that as with all other percentages we are listing, this percentage is based on the unpaid balance.
Any Indian above 18 years (resident or non-resident) or company with an active PAN Card and Indian bank account can lend with Lendbox. Lendbox is registered with RBI as an NBFC-P2P, and as per RBI regulations, all the funds deposited by lenders are parked in our escrow account before they are disbursed to borrowers.
Canada's base limitation period is six years; however, many provinces have lowered that time limit to 2 years. Is it legal for a debt collector to pursue a 20-year-old debt? Unfortunately, the answer is yes.
You don't have to worry about family loans being subject to federal tax consequences if: You lend a child $10,000 or less, and the child does not use the money for investments, such as stocks or bonds. You lend a child $100,000 or less, and the child's net investment income is not more than $1,000 for the year.
But yeah, so big picture California says 10%, that's what you can charge on a loan and if you exceed 10%, you have a usury problem.
Even private loans that provide for repayment and interest are classed as credit transactions in terms of Section 8 (4) of the National Credit Act (except to family).
On December 15, 2025, the Government of Canada passed Bill C-3, An Act to amend the Citizenship Act. This legislation changes the first-generation limit to citizenship by descent. On this page, we explain what this change means, how to check if you're affected, and what you need to do before travelling to Canada.
The criminal rate of interest makes it illegal for lenders to charge an interest rate of more than 60%. This rule applies to most lending products in Canada, including: Installment loans. Lines of credit.
The 11-word phrase often cited to stop debt collectors is "Please cease and desist all calls and contact with me, immediately," which leverages your rights under the Fair Debt Collection Practices Act (FDCPA) to halt most communication, though it must be sent in writing via certified mail to be legally binding, and collectors can still notify you of lawsuits.
What happens if I leave Canada with debt? You won't be stopped at the border, but your debts remain active. Creditors and collection agencies can continue to pursue you, and your credit will be affected.
Can I lend money to a friend and charge interest? Yes, you can, but the tax ramifications can be tricky and complicated. You would have made interest on the money if you had kept it in an interest-bearing account, and that's one good reason to charge interest.
The best way to loan money to family, friends, or businesses
The answer depends on the state in which you make the hard loan. As a private lender, you must comply with each state's usury and banking laws, and the rates you can charge are regulated. Furthermore, some states will not let you lend a certain amount without a license.
Agree On The Amount Being Borrowed
Before anything can go into writing, both parties must agree on how much is being borrowed. There's no legal limit on how much one family member can loan another, but loans over $10,000 will have certain tax requirements, which we'll look at more closely below.
You cannot be arrested or sentenced to prison for not paying off debt such as student loans, credit cards, personal loans, car loans, home loans or medical bills. A debt collector can, however, file a lawsuit against you in state civil court to collect money that you owe.