High-cost credit products
Last updated on April 29, 2022
As of May 1, 2022, high-cost credit products with more than a 32 percent annual percentage rate (APR) are regulated, meaning companies that offer those products must be licensed and meet requirements under B.C. law.
These rules apply to new or amended credit agreements after May 1, 2022. They do not apply to credit agreements made before May 1, 2022.
On this page
- High-cost installment loans
- High-cost lines of credit
- High-cost leases and rent-to-own services
- Rights and responsibilities
- Resolve an issue
High-cost installment loans
About high-cost installment loans
High-cost installment loans are loans with more than a 32 percent annual percentage rate (APR). They could be secured or unsecured, meaning you may not need to have collateral (an asset, like a car) to get the loan. High-cost installment loans must be paid back over time, along with any fees, usually within a set number of monthly installments (payments).
If you are offered or thinking of applying for a high-cost installment loan, compare and consider the alternatives, as these loans can be very expensive and risky to borrowers that use them.
Costs of high-cost installment loans
High-cost installment loans have a high interest rate and are more expensive to borrow than conventional loans from a bank or credit union.
High-cost installment loans can also have high fees. For example, you may be charged if you miss a payment or purchase optional products, such as loan insurance. These amounts can quickly add up over time and end up costing you more than the amount of the money you borrow.
If you choose to get a high-cost installment loan, carefully review the terms and conditions. When you agree to these terms, you are entering into what is known as a credit agreement. There are certain things to look for in the credit agreement.
Note that a lender cannot ask you to pay any amount that is not stated in the credit agreement.
Learn more about your rights and responsibilities or how to resolve an issue.
High-cost lines of credit
About high-cost lines of credit
High-cost lines of credit are a type of 'open credit' with more than a 32 percent annual interest rate (AIR) that allow you to borrow up to a certain amount (called a credit limit) when you need to. Similar to a credit card, you can borrow and repay money as many times as you like, as long as you stay under the credit limit.
If you are offered or thinking of applying for a high-cost line of credit, compare and consider the alternatives, as these loans can be very expensive and risky to borrowers that use them.
Costs of high-cost lines of credit
High-cost lines of credit have a high interest rate and are more expensive to borrow than conventional loans from a bank or credit union.
High-cost lines of credit can also have high fees. For example, you may be charged if you miss a payment or purchase optional products, such as loan insurance. These amounts can quickly add up over time and end up costing you more than the amount of the money you borrow.
If you choose to get a high-cost line of credit, carefully review the terms and conditions. When you agree to these terms, you are entering into what is known as a credit agreement. There are certain things to look for in the credit agreement.
Note that a lender cannot ask you to pay any amount that is not stated in the credit agreement.
Learn more about your rights and responsibilities or how to resolve an issue.
High-cost leases and rent-to-own services
About high-cost leases and rent-to-own services
Leases are a type of credit agreement in which a person rents an item (such as an appliance or furniture) that is owned by another party. At the end of the lease period, the person may be required to return the item unless they have been allowed to purchase it.
Rent-to-own services are similar to a lease. However, the person may choose to purchase the item at any time during the agreement. The information on this page applies to both high-cost leases and high-cost rent-to-own services.
Leases with an annual percentage rate (APR) of more than 32 percent are a type of high-cost credit product and are regulated. This means that companies that offer high-cost leases must be licensed and meet requirements under B.C. law.
If you are offered or thinking of applying for a high-cost lease, compare and consider the alternatives, as some leases can cost more than the item.
Costs of high-cost leases and rent-to-own services
High-cost leases have high interest charges and are more expensive to use than conventional leases with a lower interest rate.
They can also have high fees. For example, you may be charged for missing a payment or for optional products you purchase, such as insurance. These amounts can quickly add up over time and end up costing you more than the amount of the item you are leasing.
If you choose to get a high-cost lease, carefully review the terms and conditions. When you agree to these terms, you are entering into what is known as a credit agreement. There are certain things to look for in the credit agreement.
Note that a lender cannot ask you to pay any amount that is not stated in the credit agreement.
Learn more about your rights and responsibilities or how to resolve an issue.
Rights and responsibilities
High-cost credit products, including installment loans, lines of credit and leases, are regulated in B.C. That means any company that offers them must be licensed and follow laws set by the provincial government. You can see if a company is licensed with this licence lookup tool. The business must display the licence wherever it offers credit products, whether online or in-store.
A person with or considering a high-cost credit product has the right to:
- Review what it will cost, in clear and understandable language, in a credit agreement
- Cancel and repay, without penalty, within one full business day after entering the agreement
- Review and initial key terms before signing a credit agreement for a high-cost credit product
- Protection from unauthorized charges, such as wage deductions or multiple charges for declined payments
A company that offers high-cost credit products to people in B.C.:
- Must include certain information in the credit agreement, such as any fees that may apply and what optional products will cost over time
- Cannot offer you a prize or reward to apply for a high-cost credit product
- Cannot charge any fees or charges not stated in the credit agreement
- Require you to purchase an optional product, such as insurance, as part of the high-cost credit product
- Must protect your personal information and not use it to sell you other products
Resolve an issue
As of May 1, 2022, Consumer Protection BC licenses and regulates high-cost credit lenders and can investigate complaints. If you have questions or concerns with a high-cost credit lender, contact Consumer Protection BC.