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Difference between revisions of "Direct Sales, Future Performance, and Time Share Contracts (11:V)"
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Direct Sales, Future Performance, and Time Share Contracts (11:V) (view source)
Revision as of 22:08, 17 August 2022
, 22:08, 17 August 2022→3. High-Cost Credit Products
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=== 3. High-Cost Credit Products === | === 3. High-Cost Credit Products === | ||
High-cost credit products, set out in part 6.3 of the BPCPA, are loans or lines of credit that charge high interest rates and/or various fees. The formal definition of a '''High-Cost Credit Product''' is: | |||
High-cost credit products are loans or lines of credit that charge high interest rates and/or various fees. The formal definition of a '''High-Cost Credit Product''' is: | |||
* (a) A fixed credit product that has an APR that exceeds the prescribed APR and meets other prescribed criteria; | * (a) A fixed credit product that has an APR that exceeds the prescribed APR and meets other prescribed criteria; | ||
* b) An open credit product that has an annual interest rate that, calculated in accordance with the regulations, exceeds the prescribed annual interest rate and meets other prescribed criteria, | * b) An open credit product that has an annual interest rate that, calculated in accordance with the regulations, exceeds the prescribed annual interest rate and meets other prescribed criteria, | ||
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:'''NOTE:''' Because interest rates can be compounded (interest on interest) at different frequencies (usually monthly, but can also be annually, semi-annually, quarterly, weekly, daily, or even continuously – which is set by the lender as a term of the contract for the loan or other credit arrangement), annual percentage rate (APR) is the convention for quoting interest rates on an annual basis. Since legislation also expresses interest rates in APR, this allows one to directly compare the APR-quoted interest rate from the contract to the APR-quoted limit in the statute. | :'''NOTE:''' Because interest rates can be compounded (interest on interest) at different frequencies (usually monthly, but can also be annually, semi-annually, quarterly, weekly, daily, or even continuously – which is set by the lender as a term of the contract for the loan or other credit arrangement), annual percentage rate (APR) is the convention for quoting interest rates on an annual basis. Since legislation also expresses interest rates in APR, this allows one to directly compare the APR-quoted interest rate from the contract to the APR-quoted limit in the statute. | ||
The BPCPA limits the rate of high-cost credit products and sets out other limitations and prohibitions. A high-cost credit grantor is prohibited from accepting, requesting, or charging certain types of fees, including undisclosed amounts and penalties. The BPCPA also grants the borrower cancellation rights, including the right to cancel the agreement within the next day the credit grantor is open for business. There are required terms that a grantor must include in all high-cost credit agreements, and a grantor is prohibited from enticing potential borrowers by stating or implying that it will improve their credit, or by promising any prize or reward as an incentive to enter into a high-cost credit agreement. Furthermore, there are additional restrictions on collection and the use and disclosure of the borrower’s information. The list available remedies can be found in s 112.31 of the BPCPA. | |||
== H. Remedies and Sanctions == | == H. Remedies and Sanctions == | ||