The information about an instalment sale contract must appear in a written contract.
An information box must appear at the very beginning of the contract or be given to you with the contract in a separate document. The information box is one of the following (see section 61.0.14 of the Regulation respecting the application of the Consumer Protection Act):
- Information box – Instalment sale contract (example in French only);
- Information box – Variable rate instalment sale contract (example in French only).
The contract must indicate:
- the date on which the contract is entered into;
- the place where the contract is entered into;
- the name and address of the merchant;
- your name and address;
- a description of the subject of the contract (e.g. a description of the automobile, in the case of a sale agreement for a new vehicle);
- the cash sale price of the item;
- the amount of the cash down payment, if applicable, and the net capital;
- the value of any items given in exchange, if applicable;
- the total credit charges and the details of the portion that represents:
- other fees, if applicable;
- the credit rate, and specify whether it is variable. The credit rate is an annual percentage expressing the credit charges. The credit rate is used to calculate the maximum credit charges you will have to pay over the course of your contract;
- the date on which credit charges begin to accrue or how that date is determined;
- your total obligation, namely the amount financed and the total credit charges;
- the term of the contract;
- the date and amount of the payments, as well as the number of such payments;
- where applicable, information on any optional contracts: their nature, charges and your right to cancel;
- information to the effect that you may pay your obligation in part or in full before maturity, without any fees or penalties;
- where applicable, a description of any items given as security;
- where the merchant requires that you have insurance, information to the effect that you may provide insurance you already hold or choose another one;
- the date on which you will receive the item;
- information to the effect that the merchant remains the owner of the item, until you have paid all of the scheduled payments or a portion of such instalments.
Other information is required where the contract involves a variable credit rate.
The contract must also include a clause (example in French only) indicating the possibility of:
- cancelling the contract on your own initiative within 2 days following that on which both parties took possession of a duplicate of the contract. This means that both you and the merchant must find yourselves back in the situation you were in before the contract was entered into. Each party must therefore return what they have received to the other party;
- reimbursing the debt in full before maturity;
- requesting a statement of account.
The contract must also include either of the following mandatory clauses, which explain what happens in the event of a default of payment:
- Mandatory clause for contracts without a clause of forfeiture of benefit of the term (example in French only);
- Mandatory clause for contracts with a clause of forfeiture of benefit of the term (example in French only).
High-cost credit contracts
If the contract has an annual credit rate that exceeds the Bank of Canada's Bank Rate by 22 percentage points, the merchant may have additional obligations. Refer to the section on high-cost credit to find out more.
The merchant must sign the contract first, then allow you to read it, have you sign it, and give you a duplicate signed by both parties.
Last update : January 25, 2023
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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.