B.C. law requires there to be a written credit agreement whenever you borrow money. The credit agreement must state certain things that the lender and borrower agree to, such as the interest rate and any charges that may apply to the loan.
A credit agreement is important since it states up-front what it will cost to borrow money and what terms and conditions apply to the loan. Once signed, a credit agreement is a legally binding document. You must abide by what you agree to or be prepared for the consequences.
You should never sign a credit agreement unless you understand what you are agreeing to and are prepared to fulfil the terms and conditions of the loan. Do not be pressured into signing a credit agreement. You may not be able to cancel it later.
Note that a lender cannot ask you to pay any amount that is not stated in the credit agreement.
Be sure to read the credit agreement carefully before you agree to it. Pay special attention to the following information, which must be stated in the credit agreement:
If the lender makes a verbal promise (such as a promise to lower your interest rate in the future), make sure it is stated in the credit agreement. If it not, you may not receive what you were promised.
Ask questions if you don’t understand something in the credit agreement. If you need time to review the credit agreement, ask for it in writing.
If you ever feel pressured to sign an agreement, you should walk away and consider using another lender.
A lender is required to give you a credit agreement before you:
The credit agreement must state key information like:
Specific rules for credit agreements also apply, depending on the type of credit being issued (such as fixed credit or open credit). For example, a payday loan agreement must contain certain information specific to the payday loan.
Contact Consumer Protection BC if you have questions or concerns about: