Do you have difficulty making your car payments? The following information may be of interest to you.
If you have financed your vehicle purchase through the merchant, it is likely an instalment sale. Three situations may arise if you do not make your payments on time.
If you do not make your payments
The merchant with whom you have a contract could:
- demand that you make the late payments;
- repossess the vehicle, if you do not make the late payments within 30 days of receiving a notice of repossession;
- use a clause called "forfeiture of benefit of the term," if it is included in your contract. This clause allows the merchant to demand the immediate repayment of the outstanding amount. You can, within 30 days of receiving a notice of forfeiture of benefit of the term:
- make the late payments, or
- file a motion in court to request permission to return the vehicle or to have the payment terms changed.
Sale of the vehicle
You cannot sell a vehicle subject to an instalment sale before it has been paid for in full, unless you have received the creditor’s authorization (for example, the financing company).
Changes in the financing terms
The merchant or financing company could contact you after the contract has been signed to inform you of an error. This error means that the credit rate or the instalment amount will no longer be what was indicated. As a result, the financing company refuses to honour the credit contract. This situation is rare, but unfortunate.
Keep in mind that the financing company’s refusal to honour the contract has no impact on you. Normally, the dealership will have to honour the credit contract.
When you borrow money from a financing company for a fee, you are signing a contract for the loan of money.
In this type of loan, the money lender is not the owner of the vehicle you are purchasing with this loan. You can therefore sell the vehicle if you wish.
Even though the financing came from a financial institution, this may still constitute an instalment sale. It is therefore advisable to read the contract carefully before beginning the process of selling your vehicle.
You can use a calculator to determine the monthly payments or the interest rate of a loan (in French only).
Last update : November 6, 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.