Written by Consumer Protection BC’s enforcement inspector
Financing and leasing are two ways of paying for an expensive purchase by making a series of smaller payments over time, rather than one full payment upfront. These options may be beneficial at times, but they may come at a cost in the long run so it’s important to make an informed choice. Let’s find out about your rights when it comes to these payment options…
By law in BC, if a business offers you financing to make a purchase, it is required to disclose to you the total cost of that financing before you commit to the purchase. You should find this disclosure provided with the financing or credit agreement you are given to review. The information disclosed must include the total amount you will end up paying over the whole term of the financing, as well as the “total cost of credit” (or total cost of borrowing), which is how much you will pay in interest and other financing charges over and above the original purchase price.
Similarly, in the case of a lease-to-own arrangement, commonly known as leasing, businesses are required to disclose the total cost of the lease. This lets you easily see how much you will end up paying in total for the product you are leasing, including all the interest and other non-optional charges.
Before you sign a contract…
We encourage you to check these total costs before you sign a financing or lease agreement, to make sure they are acceptable to you. Even though the weekly or monthly payments may seem reasonable at first glance, the total cost may greatly exceed the original purchase price. For example, we have seen cases where the total cost to lease for an item (such as a flat-screen TV) is in the neighbourhood of four to five times the retail value of that item.
If the financing or lease costs of a purchase seem too high, it may be worth looking into what other options may be available to you, such as third party financing.
Consumer Protection BC does administer the section of the Business Practices and Consumer Protection Act that speaks to the disclosure of the cost of consumer credit. If you have a question, please share your experience in the comment section below or contact us.