When you enter into any agreement for a car or other loan type, your rights as a borrower are protected under the CCCFA (Credit Contracts and Consumer Finance Act). This Act means that your lender must act fairly with you and assess you based on your ability to repay credit.
It’s up to you to take the time and read your loan agreement and conditions. Your loan agreement will include a disclosure statement detailing:
- What you owe
- How you’ll pay
- Your interest and additional fees
- Any security or other upfront payments required
- Penalties and cancellation fees
- Repossession terms
When reading your loan agreement, figure out the total amount you’ll owe, payment dates and fees. While you can’t be expected to predict everything that will happen, it’s up to you to notify your lender if anything changes in your life that may affect your repayments, such as significant hardship or illness. You can typically work out an alternative repayment arrangement if notice is given early in those cases.
Your lender should also make sure that a clear contract is given with full disclosure and that you understand the terms before signing.
When applying for a loan, your lender will look into your financial situation to make sure you can make your repayments. Details like your bank statements and credit report are needed to prove your financial ability. In some cases, your lender will consider any credit report information from the last five years and any bank statement information over the previous few months.
These checks are a standard part of getting approved for any loan or credit amount. Doing so protects you and your lender from signing any deal you can’t realistically meet.