The cost of consumer credit is the total cost that you will pay when you purchase an item on credit including all additional finance charges such as application, administration and services charges.  The legislation applies to leases, mortgages loans and credit cards.

Under Part 5 of the BPCP Act, credit grantors are required to disclose both the total cost of credit, and the annual percentage rate (APR). The total cost of credit allows consumers to see the how much is will cost to purchase an item on credit. The APR expresses the interest rate on a loan taking into consideration any additional charges such as administration fees and brokerage fees.  This rate is often higher than an annual interest rate.

By requiring that lenders disclose these costs and by requiring that suppliers follow specific advertising, disclosure and renewal requirements consumers can compare costs before making a purchase.

The Act only applies to individuals who enter into a credit agreement for primarily personal, family or household purposes and the credit agreement is entered into with a:

• credit grantor who grants credit in the ordinary course of business;
• loan broker; OR
• prescribed credit agreement.

There are exemptions to when the legislation applies to credit sales including but not limited to:

• the sale of a service by a public utility, as defined in the Utilities Commission Act;
• a student loan made under the provincial Student Assistance Program, or under the federal Canada Student Financial Assistance Act or the Canada Student Loans Act;
• municipal taxes;
• the payment of fees or charges to a local authority;
• overdraft protection on a deposit account;
• a loan made under the Homeowner Protection Act

The cost of consumer credit is the total cost that you will pay when you purchase an item on credit including all additional finance charges such as application, administration and services charges.  The legislation applies to leases, mortgages loans and credit cards.

For more information view part 5 here, and related regulations here.