Cost of Borrowing (Retail Associations) Regulations (SOR/2002-263)

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Regulations are current to 2026-03-17 and last amended on 2016-06-14. Previous Versions

17 (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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