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Difference between revisions of "Direct Sales, Future Performance, and Time Share Contracts (11:V)"
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Direct Sales, Future Performance, and Time Share Contracts (11:V) (view source)
Revision as of 03:44, 9 August 2021
, 03:44, 9 August 2021→3. High-Cost Credit Products
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=== 3. High-Cost Credit Products === | === 3. High-Cost Credit Products === | ||
Legislation designed to protect consumers from lenders who offer loans with high interest rates but are not payday lenders received royal assent in May 2019, but requires regulations to be passed before coming into force. | |||
*(a) | High-cost credit products are loans or lines of credit that charge high interest rates and/or various fees. The formal definition of a '''High-Cost Credit Product''' is: | ||
* (a) A fixed credit product that has an APR that exceeds the prescribed APR and meets other prescribed criteria; | |||
* b) An open credit product that has an annual interest rate that, calculated in accordance with the regulations, exceeds the prescribed annual interest rate and meets other prescribed criteria, | |||
* c) A lease that has an APR that exceeds the prescribed APR and meets other prescribed criteria, or | |||
* d) A prescribed product through which credit (e.g. a loan) is extended by a high-cost credit grantor to a borrower (e.g. the consumer) primarily for a personal, family or household purpose, but does not include a payday loan, mortgage on real property or prescribed credit product. | |||
:'''NOTE:''' Because interest rates can be compounded (interest on interest) at different frequencies (usually monthly, but can also be annually, semi-annually, quarterly, weekly, daily, or even continuously – which is set by the lender as a term of the contract for the loan or other credit arrangement), annual percentage rate (APR) is the convention for quoting interest rates on an annual basis. Since legislation also expresses interest rates in APR, this allows one to directly compare the APR-quoted interest rate from the contract to the APR-quoted limit in the statute. | |||
Once the regulations are passed, a new part (Part 6.3 which is not yet in effect) will be added to the ''BPCPA'' that creates restrictions on high-cost credit products. The new regime limits a credit grantor (the lender) to a prescribed rate (or the criminal rate, if none is prescribed), requires certain terms to be in high-cost credit agreements, and requires that the credit grantor not charge, require, or accept any amount not allowed (such as a fee for making a payment before it is due), not disclosed, or that exceeds the high-cost credit agreement. | |||
Once the regulations are passed, a new part (Part 6.3) will be added to the '' | |||
== H. Remedies and Sanctions == | == H. Remedies and Sanctions == | ||
