High-cost credit products

Anyone who offers, arranges, provides, or facilitates high-cost credit products to or for consumers in BC needs a licence with us and must follow certain laws. This includes loan brokers.

What is a high-cost credit product?

The definition of a high-cost credit product applies to three different types of credit – open credit, fixed credit, and leases – that is used for a personal, family, or household purpose and has an annual percentage rate (APR)/annual interest rate (AIR) that is more than 32%. It is not a payday loan or a mortgage. It also does not include credit from banks, credit unions, or extra-provincial trust corporations. For example, your line of credit from your bank is not a high-cost credit product.

Open credit: open credit is a type of credit where you can borrow up to a certain amount and borrow and repay money as many times as you like as long as you stay under the credit limit. Open credit is considered high-cost when it has an annual interest rate (AIR) that is more than 32% and is used for a personal, family, or household purpose. An example of high-cost open credit is a line of credit that is offered by a lender other than a bank or credit union.

Fixed credit: Fixed credit is credit under an agreement that is not for open credit and typically, you pay a set amount in regular installments. Fixed credit is considered high-cost when it has an annual percentage rate (APR) that is more than 32% and is used for a personal, family, or household purpose. An example of fixed credit is an installment loan where you borrow $5,000 and repay that amount, plus interest, in equal installments over a few years.

Leases: Leases are considered high-cost when they have an annual percentage rate (APR) that is more than 32% and is used for a personal, family, or household purpose. An example of a high-cost lease is one where are supplied with a TV or furniture to use for a weekly or monthly fee and you haven’t bought the item like you would in a traditional sale.

The following businesses are not considered high-cost credit grantors:

  • Any business that only offers, arranges, provides or facilitates a credit product for or to borrowers that has an APR or AIR (as applicable) that is less than 32%.
  • Savings institutions like banks, credit unions, and extra-provincial trust corporations

Read the Business Practices and Consumer Protection Amendment Act, 2019.
Read the High-Cost Credit Products Regulation (currently available through OIC 635/2021).

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