Charged on loan in ontario is the legal rate

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Reference no: EM133588858

Question

In this case, the annual interest rate of sixty-five (65%) is likely to be considered unenforceable. This is because the maximum interest rate that can be charged on a loan in Ontario is the legal rate, which is currently set at 4% per year. Therefore, if the interest rate in the loan agreement is higher than 4%, it would be considered unenforceable and the borrower may be entitled to have the interest rate reduced to the legal rate. Additionally, under the Consumer Protection Act, a lender is prohibited from charging a higher interest rate than what is stated in the contract or than what is permitted by law. In this case, it can be argued that the interest rate charged by AB Finance Ltd. is higher than the legal rate and therefore, it is unenforceable.

Reference no: EM133588858

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