Consumer credit, lines of credit and refinancing in Quebec: read before signing
Three products, one trap: the real cost is not the advertised rate, it is the rate plus fees plus duration. How to compare, and how to get out.
Three products, one trap: the real cost is not the advertised rate, it is the rate plus fees plus duration. How to compare, and how to get out.
A loan is not income
Credit, a line of credit and mortgage refinancing do not change your situation, they move debt. The only figure that matters when signing is the total cost of credit — interest, fees, bundled insurance and prepayment penalties — not the headline rate.
Three products
A personal loan (fixed amount, fixed rate, fixed term, equal instalments) is the easiest to compare. A line of credit (variable rate, low minimum payment, reusable) is where balances stagnate for years: check what happens if rates rise. Refinancing or borrowing against the home lowers the monthly payment but moves the debt onto the house and lengthens it, usually increasing the total cost.
What the contract must show
The rate and whether it is fixed or variable, the total cost of credit and total instalments, all fees (opening, administration, insurance, late, statement, release), whether early repayment is allowed and at what penalty, what happens on default, and whether any asset secures the debt.
Getting out and recourse
List every debt with rate, balance, minimum payment and due date; negotiate in writing; consider consolidation only if the total cost truly drops; consult a free budget service before buying a debt-settlement product; and check your credit file, since errors are disputed free of charge.
Official sources
- Office de la protection du consommateur
- Autorite des marches financiers
- Agence de la consommation en matiere financiere du Canada