Many people in Canada are afraid of signing up for loans to help through their financial downfall. This is major because these people are not fully aware of their rights as a borrower.
The Canadian government has set out clear rules and regulation that secure the rights of a borrower as well as of the lender. Getting a loan is not a nightmare. In fact, if you avail your rights and fulfill your responsibilities, it is a pleasant experience for both parties in the scenario. Here are the rights of a borrower in different types of loan situations.
General rights
As a borrower, it is your right to have full and authentic information regarding the loan. This includes the full amount of the loan as well as the decided interest rate that you will pay for each payment. This document should include information that informs you when you will receive the full loan as well as when the repayment schedule begins.
You have the right to know how much money you can borrow on a yearly basis along with the total amount you can borrow overall. The minimum to maximum time you are allowed to repay the loan must be known without any confusion. It should also be clear for you what consolidation options you can avail to payback the current loan without any penalty.
Along with all this information, you should receive another document before the repayments begin. This document will give you an estimate of the payments you are expected to make every month. You will have information regarding the total amount of the loan, and the amount of the added interest that you will be paying.
Details of the lender and the borrower are also written in this document. How you are expected to send the payment and all available options, including consolidation debt, should be clearly mentioned in this document too. You should be informed of any charges other than the interest that you might have to pay. This document is supposed to list a schedule of your repayments. This means you should be told when you are sending the payments beforehand. As the borrower, you have the right to cancel or reduce the loan amount too.
Personal loan agreement
Other than general rights that you avail on any type of loan, there a few extra things you can demand on other types of loans. When signing up for a personal loan in Canada, your lender must state on the documents the property that is being used as a security. It should also state the amount of money you will be paying in interest.
In addition, you should be aware of whether your payments will first cover the interest or the loan itself. Sometimes, personal loans offer extra services and may have extra penalties. If this is the case, every single detail should be documented.
Mortgages
Agreements referring to mortgages should provide the details that any general loan agreement must. This includes the total loan amount, interest rate, annual interest rate, the date on which repayments begin, any other fees, etc. Other than these basic details, your mortgage documents should also include information regarding the total amount of payments you will be making by the end of the term.
You should be made aware of the extra penalties or extra offers that you are being offered. Any extra charges that come with these offers should be clearly stated as well. If the broker is charging a fee, that should be written on official documents as well.
Lines of credit
If you are getting a line of credit, an FRFI institution will provide you with the required details. These details include the credit limit that is available at that time and annual interest rates that will be applicable. The charges for foreign currency conversion should be mentioned in the documents as well.
Now, you are well aware of your borrowing rights. Make sure that when you sign up for a loan in the future, you avail all these rights to prevent yourself from any hassle at all. All FRFI institutes will provide these details on their own. Read all your documents before you finalize a deal. Double-check with this list that you have received all the required information. However, along with availing your rights, also fulfill your responsibilities of a borrower.