# Personal loans to friends



## Angela Stark (Oct 31, 2009)

On the news a couple of years ago, in BC, they said that if you are NOT an financial institution, it was illegal to charge interest on any money that you have lent out. This would fall under the Loan Shark Law. 

Now I live in Alberta. And apparently it is ok in Alberta to charge interest if you are not a financial institution. Is this true? Would this law not be federal instead of provincial? And is it ok to charge interest if I am NOT a financial institution? And if it is ok, then would I not then be branded as a Loan Shark? Is that NOT the definition of a Loan Shark?


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## OhGreatGuru (May 24, 2009)

Look up dictionary definitions of loan shark. They charge exhorbitant rates of interest, and use coercion or physical threats to enforce payment.

I think your memory about that program must be faulty. Most civilized countries have laws against usury, which is charging exorbitant rates of interest. But I can't think of any jurisdiction in Canada that prohibits personal loans at reasonable interest rates.


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## Rickson9 (Apr 9, 2009)

Hard money lenders wouldn't exist if this were true.


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## 83gemini (Apr 4, 2009)

I'm not in a law library at the moment,* but I am not convinced the provinces are empowered to do this because of Federal jurisdiction over interest. The reality is a bit more complex then this (i.e. the provinces regulate payday lending). Suffice it to say I doubt you have a problem.

*I am not a lawyer.


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## Berubeland (Sep 6, 2009)

Usury is charging interest over 60%. If you charge 59% you are fine.


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## remin12 (Nov 5, 2009)

Depends how much you plan to charge, but having heard what extremes loan sharks go to, i don't think you'd treat your friend that way.


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## ThickenMyWallet (May 20, 2009)

Starting Nov. 1, you have to be a registered payday loan corporation in B.C. to be in the business of payday loans and then there are restrictions on how much interest you can charge. I suspect that is what the reporter was saying.

Criminal rates of interest are federal jurisdiction but the regulation of pay day loans and the registration of secured loans between persons is provincial jurisdiction.


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## iherald (Apr 18, 2009)

Berubeland said:


> Usury is charging interest over 60%. If you charge 59% you are fine.


This is correct. If you charge 60% you are breaching the Criminal Code of Canada. Don't forget if you do charge interest to declare it on your income tax!


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## tom_ford (Oct 29, 2009)

Where I came from, it is very common for ordinary people to have a small money-lending enterprise. We call it 5-6. You borrow 5k, you pay me 6k.


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