The Consumer Protection Act provides for the times and situations where you have the right to cancel an instalment sale contract on your own initiative, without having to justify your decision.
When such a contract is cancelled, both the merchant and you must find yourselves back in the same situation you were in before the contract was entered into.
You may cancel an instalment sale contract without having to pay any fees within 2 days following that on which you and the merchant are in possession of a duplicate of the contract. You must:
- give the item back to the merchant, if you have already received it; and
- notify the merchant of the contract cancellation in writing, if you have not received the item.
This 2-day deadline does not apply if the instalment sale contract is for a road vehicle that has been delivered to you.
Moreover, the cancellation deadline is 10 days for a “high-cost” contract (a contract with an annual credit rate that exceeds the Bank of Canada's Bank Rate by 22 percentage points). Refer to the page on cancelling a high-cost credit contract for more details.
It is important to know that, if you cancel your contract within the prescribed deadline, the merchant is not allowed to file a bad report in your credit file.
Requesting the cancellation of credit charges
If a merchant fails to abide by the law and the situation causes you harm, you can request that no credit charges apply. If you cannot come to an agreement with the merchant, you can turn to the courts. If you win your case, the judge may decide that the credit charges already paid must be reimbursed to you, or grant you some other compensation.
You may file such a request, for example, if the merchant:
- did not evaluate your ability to reimburse the credit but was required to do so;
- fails to abide by the legal requirements regarding the terms of payment;
- did not indicate the credit charges in the contract as required by law. This would be the case, in particular, where the credit rate was not indicated on an annual basis.
Last update : November 7, 2022
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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.
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