Your Rights As A Borrower

Your Rights As A Borrower

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated April 29, 2021

Life is unpredictable and can often take us by surprise, especially when it comes to our finances. Job loss, divorce, car repairs, home repairs, or other unexpected expenses are all a part of life and can often require extra financial help. A personal loan can be a fast and easy solution but many Canadians shy away from this option because they are unfamiliar with it or are concerned about the risks.

As a borrower, federally regulated financial institutions are obligated to provide you with specific information concerning the loans they offer. The type of information a financial institution must provide depends on the type of loan you get: personal loans, lines of credit, credit cards, car loans or mortgages. Let’s explore your rights and responsibilities for each so that you can decide with confidence what works for you. 

Personal Loans 

When obtaining a personal loan, the financial institution that you work with will be obligated to provide you with pertinent information regarding the loan. The information given is used to assess the cost, time, and effort you’ll need to manage the loan. It is also your right and responsibility to read and understand the terms and conditions of the loan contract prior to signing. 

You should also make sure that the financial institution you are applying with has properly discussed the specifics of the loan in the agreement. Besides the glaringly obvious information that you know is stated in the contract i.e. the principal amount borrowed, the interest rate, and the term of the loan, here are some other pieces of information that the lender is obligated to disclose:

  • Annual percentage rate – the APR is the real cost of the loan per year. Along with the interest rate, it includes any fees that are charged like origination fees, administrative fees, and any other service fee.
  • Fees depending on the lender, there may be other fees for insufficient funds, early discharge, or penalty fees for late-payments or prepayments. 
  • Repayment amount – is the payment amount you have to make periodically to pay off the loan. Due Date – is the date you have to make each of your periodic payments.
  • Date of advance – is the date when your interest will start being charged 
  • Amortization period – is the total time it will take to pay off the entire loan  
  • Total interest paid plus the principal – based on the interest rate provided the financial institution should not only let you know how much interest you will have to pay in total. They should also let you know the grand total you will be paying (principal + interest). 

In addition to the information above, depending, if you opt for a fixed or variable rate personal loan, the financial institution must also provide you with the following: 


They must let you know that your payments first cover the interest before the principal. 

They must also list the details of any extra services you’ve added to the loan like loan insurance. If you’ve applied for a secured personal loan, the lender should also provide information that accurately depicts the collateral in the contract. 

Variable Rate 

The lender must disclose the following information at least once a year if the variable rate is affected by other rates like the prime rate

  • An estimate of each payment you will have to make for the next period
  • Beginning and ending balance at the end of each period
  • Provide the interest rate every period  

Credit Cards

When you apply for a credit card you have the right to know what features it has. This includes:

  • The credit limit
  • Grace period
  • Points system
  • All costs involved like the interest rates, fees, penalties and any other charges. 

Once you have the card in your possession, the issuer must provide you with a statement every month detailing all your transactions for that billing cycle, the outstanding amount you owe, due date, the minimum payment required and an estimation of how long it will take you to pay off your balance if you choose to pay the minimum amount only.  Moreover, any changes to your agreement must be notified in writing to you 30 days before the change goes into effect. 

Lines Of Credit

If you decide to get a line of credit, there are certain rules federally regulated financial institutions must follow before closing the deal. The institution must state your credit limit and the interest rate available at the time in a separate disclosure statement or in the agreement contract. They must also provide you with specifics regarding the following: 

  • Fees – annual fees, late fees, currency conversion fees and any other charges.   
  • Interest rate – the APR and interest rate calculations (if you have a variable rate) must be provided.  The date when the interest starts being charged should also be included. 
  • Payments – minimum payment amount required and how it’s calculated.

After the contract is signed, the financial institution must also provide you with another statement every month covering things like your transactions, the interest charged, credit limit used versus available and payments due.  


Depending on the mortgage you decide to get, the federally regulated lender will have to provide you with certain information that allows you to make an informed decision. In general, the financial institution is obligated to provide you details regarding the cost and time related to paying off the loan. This includes basic information like your principal amount borrowed, the interest rate, the APR, your payment amount, payment due dates, and fees, etc. Moreover, your mortgage contract should also include all charges, penalties, extra offers accepted, as well as details regarding the following.

Mortgage Prepayments

Prepayments are the “extra” money you pay on top of your regular mortgage payments. This only applies if you have a closed mortgage as they usually do not allow you to pay more than what you’ve already agreed to. However, depending on the lender, you may have prepayment limits or privileges that dictate how much “extra” you can pay each year. By law, the financial institution must detail how much you can be charged for the prepayment and how that charge is calculated. 

Mortgage Security 

When you apply for a mortgage it is typically secured by the house you are looking to buy. There are two ways mortgage security is registered as: conventional charge or a collateral charge. The way your mortgage security is registered can affect your ability to transfer your mortgage, borrow additional funds, and how you can have your mortgage security discharged. 

Mortgage Renewal 

When your mortgage term is coming to an end, your financial institution is obligated to provide you with a renewal statement detailing the new mortgage. This renewal statement must be provided at least 21 days before the end of your current term. The new mortgage agreement should include the same type of information as the current agreement plus any changes. You should also know that at the end of the term you can choose to renew with the same lender or with a new one. So, be sure to shop around before to get the best mortgage rate with the right lender.

Mortgage Life Insurance

Mortgage life insurance is an optional service that covers the costs of your mortgage payments in the event you pass away. If your financial institution offers you this service, it too must be included in the agreement. Any fees that apply must be stated and you must be given an option to cancel the service. 

Car Loans

Whether you lease or finance a car through a federally regulated lender there are consumer protection laws that the lender must abide by. Before closing an agreement, the lender by law must provide you with a disclosure statement that discloses all the costs involved in getting the car loan. This includes:

  • the principal amount borrowed
  • the interest rate
  • fees and penalties

In addition to that, a car lease agreement must also state any driving limitations imposed such as the number of miles that can be used per year, the condition the car must be in when returned, maintenance obligations etc. 

What If A Lender Is Hiding The Information Listed Above From Me? 

Are your rights as a borrower not being respected by one of the federally regulated financial institutions? Then please contact the Financial Consumer Agency with a formal complaint via telephone, mail or email. 

Phone:  1-866-461-3222

Email: Online Form

Mail: 427 Laurier Avenue West, 6th Floor, Ottawa ON K1R1B9

Bottom Line

Do not forget that it is also your responsibility to ensure you read and understand all the terms and conditions of the agreement prior to signing. All federally regulated financial institutions will usually provide you with the information mentioned above, however, be sure to compare the information provided above to confirm you are being provided with all the appropriate information you need to make the best decision for your needs.

Rating of 5/5 based on 4 votes.

Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Save With Loans Canada

Special Offers

Borrow $500-$50,000

Borrow $500-$50,000

Don’t pay until March with this offer from our partner, Fairstone.* Ends January 31st.

View Offer
Cashback & Bonus Offer

Cashback & Bonus Offer
Ends March 1st, 2023

New Offer! Get up to $2,000 cashback + a $50 bonus on signing up. Conditions apply.

View Offer
Earn 5% Cash Back With Neo

Earn 5% Cash Back With Neo
No annual fee!

Earn an average 5%¹ cash back at thousands of partners and at least 0.5%² cashback guaranteed.

View Offer
Build Credit For $10/Month

Build Credit For $10/Month

With KOHO’s prepaid card you can build a better credit score for just $10/month.

View Offer
Best Personal Loan Provider by Greedy Rates

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.