You're browsing in a furniture and appliance store. A salesperson approaches you. All smiles, he says, Did you know that we have a special today? You can buy now and make no payments for 12 months!
Do you think that all "buy now, pay later" arrangements are the same?
Well think again! There are different types of buy now, pay later contracts. Your rights vary depending on the type of contract you signed. It is therefore important to read the contract carefully.
One or Two Contracts?
Many furniture and appliance stores deal with banks or other finance companies so you can finance purchases you make at their stores.
When you buy something, the salesperson might have you sign a contract of sale with the store for the purchase and a financing contract with a finance company. So you're actually dealing with two different institutions: the store and the finance company.
If there's a problem with your financing, for example, you miss a payment or the interest rate is higher than expected, it won't necessarily be with the store that you'll have to sort things out.
Who Is the Owner?
You sign a buy now, pay later contract and leave with your purchase. Did you know that you might not own what you bought? That's right: the contract can say that the seller remains the owner until you've made part or all of your payments. You'll only become the owner afterwards. This is called an "instalment sale".
It's important to read your contract carefully to see if you've agreed to an instalment sale because the law deals with instalment sales in a very specific way.
Payments: Read the Fine Print!
Do you have to pay a little each month or do you have a grace period after which you have to pay the whole amount at once? This information is in your contract. It's important to understand what you're agreeing to before signing a contract. If you choose the grace period option, dealing with life's ups and downs will be your responsibility. For example, if you cannot make the payment one year later when it becomes due because you've lost your job or gotten divorced, neither the store nor the bank is obliged to be understanding about your situation.
Consequences of Not Paying on Time
Hard times hit and you can't pay on time! What does your contract say? Does the whole amount become due if you miss a single payment? Is there a big penalty? Do you have to give back what you bought?
In Case of Problems with a Buy Now, Pay Later Contract
The law requires stores and finance companies to respect very strict rules if they want to make this type of contract with you. If you have a problem, here is what you can do :
1. Read the contract to see
- whether you have to deal with the store, the finance company or both,
- what the contract says about this kind of problem, and
- whether the store or the finance company is respecting what the contract says.
2. Ask yourself if the contract is legal. A legal professional can help you answer this question.
3. Depending on the type of problem, you might be able to get help from:
This article explains in a general way the law that applies in Quebec. This article is not a legal opinion or legal advice. To find out the specific rules for your situation, consult a lawyer or notary.