Merchants are required to give you a document:

  • before entering into a high-cost credit contract with you;
  • before increasing your credit limit (e.g. for a credit card), in the case of a high-cost contract.

The document you are given presents the evaluation of your ability to reimburse the credit.

Information presented in the document

Only the following information must appear in the document:

  • the information that was taken into consideration to evaluate your ability to reimburse the credit;
  • information on your debt ratio, which is a percentage that represents some of your monthly expenses versus your gross monthly income:
    • the method used to calculate your debt ratio,
    • the elements that were used to calculate the debt ratio,
    • your debt ratio,
    • a warning (in French only), if this ratio is higher than 45%.

Debt ratio of more than 45%

Have you entered into a high-cost credit contract despite a debt ratio of more than 45%? You are deemed to have entered into a contract that constitutes an excessive, abusive or exorbitant obligation. You could therefore ask the merchant to cancel the contract or decrease your obligations. You could also ask the courts to do so.

Results of the evaluation

Has the merchant given you the document? Check to make sure! If you were not given the document or if it does not present the required information, the merchant is not allowed to have you pay any credit charges, and is even required to reimburse any you may have already paid.

This rule does not apply if you dealt with a bank or a financial services cooperative that fulfills the evaluation obligation.

Particularities regarding pawnbrokers

Has the merchant extended you a loan (net capital) of $500 or less? The contract entered into, and all others entered into within the previous 30 days, must be taken into consideration to determine this net capital. Exceptions apply in the case of a pawnbroking or repurchase agreement:

  • the merchant is not required to give you the document or calculate your debt ratio;
  • despite a debt ratio of more than 45%, you may not ask the merchant or the courts to cancel the contract or decrease your obligations.

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Last update : September 23, 2021

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The information contained on this page is presented in simple terms to make it easier to understand. It does not replace the texts of the laws and regulations.