The Highs and Lows of Long-term Financing


Geneviève Charlet


Option consommateurs




Personal loans, instalment plans, rental plans or long-term financing plans now allow consumers to make regular low payments and take up to eight years to pay for a car, four years to pay for a piece of furniture or fifteen years to pay for a pool.

The law, for its part, does not regulate how long merchandise may be financed. However, certain provisions of the laws of Canada, the United States, France and Australia offer some interesting solutions. These include mandatory information that must appear in advertisements, credit contracts and advertising standards with regard to the display of periodic payments, incentives to purchase goods on credit, the cancellation period, the option of repaying the debt at any time, and the rights guaranteed by law in the event of forfeiture of benefit of term.

These legal solutions are certainly relevant, but they seem insufficient if provisions making the lenders more responsible are not included within the law itself. Beyond setting a limit on the amortization of credit agreements, a truly effective approach toward solving the problems raised by long-term financing must involve heightening the responsibility of the lenders. In this regard, Canada could seek inspiration from responsible lending legislation passed in France and Australia.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.

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Source: Consumer Policy Research Database

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