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Cost of Borrowing (Foreign Insurance Companies) Regulations

Version of section 17 from 2006-03-22 to 2009-12-31:

  •  (1) This section applies to loans for fixed amounts of credit, except mortgage or hypothec loans.

  • (2) A borrower under a credit agreement may prepay

    • (a) the outstanding balance of a credit agreement, at any time, without incurring any charge or penalty for making the prepayment; or

    • (b) a part of the outstanding balance

      • (i) on the date of any scheduled payment, if payments are scheduled once a month or more often, or

      • (ii) at any time but only once a month, in any other case.

  • (3) A borrower under a credit agreement who prepays

    • (a) the outstanding balance must be refunded or credited with the proportional amount of any non-interest charges, except for disbursement charges, paid by the borrower or added to that balance, calculated in accordance with the formula set out in subsection (4); and

    • (b) a part of the outstanding balance is not entitled to a refund or credit related to non-interest charges mentioned in paragraph (a).

  • (4) The proportion of non-interest charges to be refunded or credited to a borrower shall be determined in accordance with the formula

    R = A × ((n-m)/n)

    where

    R
    is the amount to be refunded or credited;
    A
    is the amount of the non-interest charges;
    n
    is the period between the imposition of the non-interest charge and the scheduled end of the term of the loan; and
    m
    is the period between the imposition of the non-interest charge and the prepayment.

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