Ottawa’s New Interest Rate Cap: Help or Hurdle? The federal government has reduced the maximum loan interest rate from 48% to 35% to combat predatory lending. While meant to protect borrowers, critics warn it could push vulnerable Canadians toward riskier, illegal options. Key Changes: Interest Rate Cap: Lowered to 35%. Payday Loans: Fees capped at $14 per $100 borrowed. Exemptions: Pawnshops unaffected for loans under $1,000. Concerns: Critics like Bruce Sellery of Credit Canada say the cap could limit access to legal loans for those with poor credit, forcing them to riskier lenders. Government’s Aim: The cap prevents debt traps, saving borrowers money. For instance, a $5,000 loan now costs $775 less in interest over two years. Loophole Alert: Corporate loans over $500,000 are exempt, sparking fairness concerns. Bottom Line: The new cap may help some but could leave others with fewer safe borrowing options, raising questions about its overall impact.

 

Author:

Peter Eki

Calgary Realtor