What the loan costs you.
The payment, the total interest, and the number lenders rarely lead with — what you pay on top of what you borrowed.
Disclosure rules from the federal Cost of Borrowing Regulations; criminal interest rate cap per Criminal Code s. 347.
| Amount financed | $0 |
| Total of all payments | $0 |
| Cost of borrowing | $0 |
Interest compounds at the payment frequency, which is how Canadian personal, car and student loans are normally written. Mortgages compound semi-annually by law — use the mortgage calculator for those.
What the same loan costs at different rates
Total interest on a $30,000 loan, monthly payments
| Rate | 3 years | 5 years | 7 years |
|---|
Two things fall out of that table. Stretching the term lowers the payment but raises the total cost sharply — a seven-year car loan is the most expensive way a dealership will sell you a car. And a few percentage points of rate is worth thousands of dollars, which is why a pre-approval from your own bank or credit union before you walk onto a lot is worth the afternoon it takes.
How the payment is worked out
The standard amortizing formula. Every payment covers the interest accrued since the last one, and whatever is left reduces the principal — which is why early payments are mostly interest and later ones mostly principal.
Your rights when borrowing in Canada
- Federally regulated lenders must disclose the APR and the total cost of borrowing in writing before you sign, under the Cost of Borrowing Regulations.
- The criminal interest rate cap is 35% APR as of 1 January 2025 — lending above it is an offence under section 347 of the Criminal Code.
- Optional add-ons — loan protection insurance, extended warranties, rustproofing — are exactly that. Rolled into the loan, they accrue interest for the full term.
- Most Canadian personal loans allow prepayment without penalty. Confirm it in writing; some fixed-rate car loans do not.
Ask for the APR, not the rate
The advertised rate excludes fees; the APR includes them. A 6.99% loan with a $500 origination fee costs more than a 7.49% loan with none. The APR is the only number that lets you compare two offers honestly, and lenders are required to give it to you.
Where a loan is the wrong tool
Above roughly 20% you are usually better off delaying the purchase or using a secured line of credit. Payday loans sit far above that — often several hundred percent annualised once fees are converted — and are regulated provincially rather than by the federal cap.