Before entering into a contract for the loan of money with you, merchants are required to evaluate whether you can reimburse this credit. A merchant who fails to do so is not allowed to have you pay any credit charges, and is even required to reimburse any you may have already paid.

The law considers that banks and financial services cooperatives fulfill this evaluation obligation. The information that follows therefore concerns you if you do business with a financing company or a company that offers "alternative" financial services.

Information that may be used

Merchants are deemed to have satisfied this obligation where they have taken certain information into consideration in their evaluation. Among other things, this includes your income, monthly expenses incurred for housing, monthly payments required by other credit contracts, etc.

Results of the evaluation

In the case of a "high-cost" contract for the loan of money (i.e. the annual credit rate that exceeds the Bank of Canada's Bank Rate by 22 percentage points), merchants are required to give you a document that presents the results of their evaluation.

Merchants responsible for the evaluation

This evaluation is the responsibility of the merchant that enters into the credit contract with you. The merchant may also assign the contract to another merchant. If the latter is the merchant that approved the contract, that merchant is responsible for conducting the evaluation.


In the case of a pawnbroking or repurchase agreement, the merchant is not required to carry out this evaluation if the amount of the loan (net capital) is $500 or less, considering the contract entered into and all others entered into within the previous 30 days.

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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.