Overview of Consumer Protection in Canada Series – Consumer credit

Cost of credit (also referred to as cost of borrowing) disclosure is generally harmonized across several Canadian jurisdictions, although the push for complete harmonization seems to have lost steam. Some provinces and territories have not yet implemented legislation based on the Agreement for Harmonization of Cost of Credit Disclosure Laws In Canada Drafting Template (1998). Cost of credit references all amounts a lender must disclose to a borrower that are payable under, or as a condition of entering into, a credit agreement (open and fixed credit) or a lease agreement. Among other disclosure specific to the type of consumer agreement (e.g. open credit agreement, fixed credit agreement or a lease agreement), these agreements must disclose the following, as applicable, the annual percentage rate, prepayment rights and charges, the amount and timing of all payments, optional services, charges for optional services and the consumer’s rights for cancellation of optional services. Initial disclosure statements are to be delivered to consumers before or at the time the consumer enters into the agreement. Subsequent disclosure statements have to be provided to consumers in prescribed circumstances.

 

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