Mistakes, Complaints and Official Sources
High-cost instalment loans in Canada: provincial rules, 32% thresholds and how to compare
How high-cost personal loans are regulated in Canada after the 35% APR cap, the provincial high-cost credit regimes in Alberta, Manitoba, BC and Quebec, and the costs to watch.
High-cost instalment loans are personal loans, typically a few hundred to several thousand dollars, offered online or in storefronts to people who cannot get credit from a bank or credit union, at rates that can approach the 35% APR criminal limit. Since 2025 they cannot legally exceed that limit. Several provinces add a separate layer: Alberta, Manitoba and British Columbia regulate "high-cost credit" above a 32% APR threshold, and Quebec above the Bank of Canada's bank rate plus 22 points, with licensing, extra disclosure and cancellation rights. These loans can be legal and still be the most expensive way to borrow outside payday loans.
Part of personal loan mistakes and official sources. General information; check your province's current rules.
Where high-cost credit sits
| Type | Typical size and term | Legal ceiling |
|---|---|---|
| Payday loan | $1,500 or less, up to 62 days | $14 per $100 (licensed, designated provinces) |
| High-cost instalment loan | Hundreds to several thousand dollars, months to years | 35% APR (Criminal Code) |
| Mainstream personal loan | Larger amounts, 1 to several years | 35% APR, but usually priced far lower |
Provincial high-cost credit regimes
| Province | Threshold | What the regime adds (summary) |
|---|---|---|
| Alberta | APR of 32% or more | Licensing of high-cost credit lenders, disclosure, borrower rights |
| Manitoba | APR above 32% | Licensing, disclosure, cancellation rights |
| British Columbia | APR above 32% (in force since 1 May 2022) | Licensing for each location, disclosure, cancellation rights; banks and credit unions exempt from licensing |
| Quebec | Credit rate above the Bank of Canada bank rate plus 22 points | Capacity-to-repay assessment, 10-day cancellation, OPC permit; see Quebec rules |
| Ontario | No separate high-cost instalment credit regime in force as of this writing | The Consumer Protection Act, 2002 and O. Reg. 17/05 govern credit agreements and contain no high-cost credit rules in the e-Laws versions checked in October 2026; Ontario has consulted on high-cost credit and passed a new Consumer Protection Act, 2023 that was awaiting proclamation in the most recent official text we checked |
Other provinces have been moving in the same direction. Because these rules change, check the current position with your provincial consumer protection office before relying on this table.
What makes these loans expensive
The rate itself. Illustrative: $3,000 over 3 years costs about $1,879 in interest at 34.9% and about $587 at 12%.
Add-ons. Creditor insurance, "loan protection" plans, memberships or credit-monitoring products may be offered with the loan. Optional products are excluded from the APR, but they can add a large amount to the total. See loan insurance add-ons.
Refinancing ("top-ups"). A lender offers to increase your loan back to its original amount part way through. Illustrative example:
- You borrow $5,000 at 29.99% over 36 months: payment about $212.23; total interest about $2,640.
- After 12 payments (about $2,547 paid), you still owe about $3,796.
- You accept a "top-up" to a new $5,000 loan over 36 months, receiving about $1,204 of new cash.
- Over the four years you pay about $2,547 + $7,640 = about $10,187 for $6,204 of money received: a cost of about $3,983.
Each top-up restarts the most interest-heavy part of the schedule. Refinancing is not always wrong, but compare the cost of the top-up with other ways of getting $1,204.
How to compare a high-cost offer
- Get the APR and the total cost of borrowing in writing.
- Check the APR is no more than 35%; recalculate it if any fee is deducted (APR with fees).
- Ask which products are optional and ask for a version of the offer without them.
- Confirm the lender's provincial licence where one is required.
- Check your cancellation right: for example 10 days for Quebec high-cost credit.
- Confirm you can prepay without a charge.
- Compare with at least one alternative: a credit union, a secured loan, a credit-builder product or a payment plan with the creditor.
Use the personal loan calculator to see the payment and total interest.
When it might be the least bad option
High-cost credit is sometimes the only credit available. If you do use it:
- borrow the smallest amount for the shortest term you can afford,
- decline optional products unless you have compared them,
- repay early when you can,
- avoid top-ups,
- use the loan's on-time payments to rebuild credit so the next loan comes from a mainstream lender.
If you are borrowing to keep up with other debts, stop and talk to a non-profit credit counsellor; see unmanageable loan debt.
Frequently asked questions
Did the 35% cap make these loans disappear?
No. Lenders that priced above 35% had to reduce their rates or change their products. Loans just under the cap remain widely available.
Is a 32% loan in Alberta "high-cost" but legal?
Yes. A loan can be above the provincial high-cost threshold and below the 35% criminal limit. The provincial regime adds licensing and disclosure; it does not ban the loan.
Can a high-cost lender garnish my wages?
A lender generally needs a court judgment before it can garnish wages. Provincial rules also limit collection practices; complain if a collector misleads or harasses you.
Do these loans help rebuild credit?
They can, if the lender reports to the credit bureaus and you pay on time. A secured credit card or credit-builder loan can do the same at lower cost.
Sources
- Justice Laws Website — Criminal Code s. 347 (35% APR)
- Consumer Protection BC — BC high-cost credit licensing
- Alberta payday loans — Alberta payday and high-cost credit
- Office de la protection du consommateur — Quebec high-cost credit
- Consumer Protection Ontario — Ontario credit agreements and complaints
