Do you have questions about the payment of your instalment sale contract? Here is what you need to know.
When you finance a purchase on credit, you have to pay credit charges.
Credit charges include all of the fees you have to pay, in addition to the amount financed. Among other things, they include:
- insurance (other than automobile insurance, among other things);
- administration fees.
The amount of the credit charges must be indicated in your contract.
In your contract, the credit charges are also expressed as an annual percentage: the credit rate. There is only one case where merchants can change this rate: you entered into a contract with a variable rate.
The credit rate is used to calculate the maximum credit charges you will have to pay over the course of your contract.
If your instalment sale contract provides for one payment per month, you will usually have to make the 1st payment one month after signature. If your contract provides for one payment per week, you will in many cases have to make the 1st payment one week after signature.
Period with no credit charges
Is the date of your 1st payment set at more than 35 days after signature? The credit charges do not accrue between the date on which you signed the contract and the start of the period in which the 1st payment is due.
Here is an example: You are entering into a contract on July 20 for which the 1st payment is due on November 20 of the same year. You have agreed to make one payment per month. The credit charges will begin to accrue on October 20.
Frequency of payments
After the 1st payment, at least one payment must be made every 35 days. The payments must be equal amounts. Only the final payment may be smaller.
Reimbursement before maturity
At any time, you may reimburse the amount you owe, in part or in full, before maturity, with no penalties. Doing so will save you credit charges.
Once you have reimbursed your debt in full, the merchant must provide you with a release, free of charge. This is a document in which the merchant recognizes having been paid in full.
When you enter into an instalment sale contract, you have to make the payments as provided for in the contract, among other obligations.
Are you late with your payments ? Unless you come to an agreement with the merchant, he or she can choose from the 3 following options.
Demand the late payments
The merchant may demand that you immediately pay all of the instalments that are late.
Repossess the item
The merchant may send you a written notice demanding you make all late payments, failure of which the merchant will repossess the item after 30 days. This notice is called a Notice of Repossession (29.8 KB).
Within 30 days of receiving the notice, you can:
- make the late payments; or
- return the item to the merchant.
The merchant may not repossess the item before that deadline.
Demand all scheduled payments
The merchant may send you a notice along with a statement of account. In this notice, the merchant demands that you pay all the late instalments within 30 days, otherwise he or she will demand payment of all instalments provided for in the contract (both late instalments and those to come). This notice is called a “Notice of Forfeiture of Benefit of the Term.”
In order to have the right to send you such a notice, the merchant must have included a clause to that effect in your contract.
If you receive a Notice of Forfeiture of Benefit of the Term, you may, within the 30-day deadline:
- make the late payments;
- petition the court to obtain permission to return the item or have the terms of the contract changed.
All of these situations can have financial consequences and tarnish your credit file. If you need more information, you can contact the Office de la protection du consommateur.
Selling the item
You may not sell an item you have purchased by instalments before having paid it off in full, unless you have received authorization to do so from the merchant.