Instalment Sales

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“Buy now, pay later”—sound tempting? Did you know that you might not own the item you bought until you’ve made part or even all of your payments?

It’s true. The store or automobile dealer might decide to enter into what is called an “instalment sale” with you.

I won’t own what I bought?

It’s possible! Read the contract you’re given. If it says that the merchant (seller) remains the owner of the property until you’ve made all or part of your payments, it’s an instalment sale.  Otherwise, it’s another type of contract involving credit.

Good news!

The law protects you if you buy something under an instalment sale:

 

Consumer’s Rights

Merchant’s Rights

Insurance

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Can require the purchaser to take out insurance, but can’t force the purchaser to use any particular insurer.

The Contract   

The contract must be in writing and the law requires that the merchant indicate the following:

  • your name and address
  • merchant’s name and address
  • date and place the contract was made
  • description of the item purchased
  • the cash price as well as any installation, delivery and other charges
  • the amount that has been paid
  • the amount still owed
  • if you take out insurance, the cost of the insurance
  • the total amount of credit charges for the entire contract (interest charges, for example)
  • the total credit charges in percentage terms 
  • date of the first payment
  • date and amount of the last payment
  • the total you owe
  • the amount of periodic instalments, the number of instalments and the date they must be paid
  • the delivery date
  • the fact that the merchant remains the owner of the item sold and the date that you become the owner
  • an explanation of the consequences of not respecting the contract       In the contract, the merchant can say that the purchaser must pay the entire amount still owed if the purchaser misses a single payment.

In the contract, the merchant can say that the purchaser must pay the entire amount still owed if the purchaser misses a single payment.

Instalments
  • The instalment payments must all be the same amount, except for the last one, which can be lower.
  • There can be only one instalment payment per period and each period must be not over 35 days.
  • If seven or more days have gone by since the contract was signed and you haven’t received the item, you don’t have to pay any instalments until it’s delivered.

If the purchaser fails to make an instalment payment, the merchant can do the following:

  • require that the purchaser pay the instalments that should have been made
  • ask that the items sold be returned, without having to reimburse  the instalments already paid
  • if it’s indicated in the contract , ask the purchaser to pay all the instalments (“forfeiture of the term”

Cancellation of the Contract   

1)         You changed your mind?

You have two days to cancel the contract as of the time you receive a copy of it. 

Exceptions:

You can’t cancel your contract in these two cases:

  • what you buy is a new car and you have possession of it 
  • as a result of your fault, you’re unable to restore the item in the condition in which you received it

2)         The information required by law to be in your contract isn’t there and you suffered as a result?

You have three years as of the date the contract is signed to ask a court to cancel it.

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Statement of Account 

You can ask to get one statement per month showing, among other things, amounts paid and still owed. It is free of charge.            

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Important !
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.

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