The Financial and Consumer Services Commission (FCNB) is reminding those making large consumer purchases to avoid feeling pressured into signing financing contracts they haven’t had the time to review or understand.
“Increased inflation has led to rising prices for day-to-day products, such as food, gas and household goods,” said Alaina Nicholson, FCNB’s director of consumer affairs. “It’s also led to rising interest rates, which can cost you more when borrowing money.”
“Purchasing a big-ticket item, such as a car, boat or other large consumer product can be exciting, but with low inventory on many consumer goods due to the pandemic, consumers may feel pressured to act fast,” Nicholson added. “Consumers need to remember that being approved for a loan or credit product does not always mean they will be able to afford the payments.”
As New Brunswick’s financial and consumer services regulator, FCNB has a mandate to educate New Brunswickers on how to make informed financial and consumer decisions, particularly when it comes to the cost of credit.
FCNB recommends New Brunswickers avoid:
- Feeling rushed to sign financing documents due to appointments close to closing, prolonged waits to meet with financing agents or scarcity of inventory.
- Feeling pressured into buying a product you can’t afford through extensions of loan terms, or promises to grant large cashbacks or payment-free initial terms.
- Falsifying information on financing applications to qualify for financing.
- Succumbing to the fear of missing out (FOMO).
Under New Brunswick’s Cost of Credit Disclosure and Payday Loans Act, a lender must give consumers a disclosure statement before entering into a contract. The statement explains the total cost of borrowing and other important information.
Before agreeing to any loan or credit product, consumers need to understand how much it will cost them to borrow (fees, interest rate, and other charges) and how long it will take to pay it back. Those making large purchases should make also make sure the financing payments fit into their budget.
“Before entering into a big financial commitment, consumers need to fully understand the costs involved and what they are agreeing to when signing a contract,” Nicholson said.
The Act, however, doesn’t cover high-pressure sales tactics used to entice consumers to sign on the dotted line. Consumers also need to be aware of these tactics, which may put them at risk regardless of whether the person is registered to arrange financing.
“Consumers should feel comfortable understanding their financing agreements and should take the time to walk away and consider the proposed financing terms before they sign on the dotted line,” Nicholson said. “Feeling pressured or rushed into signing a contract might be a sign that you should step back and review to make sure the terms are favourable to your personal circumstances.”
“Additionally, consumers need to be honest on financing applications. Falsifying information on a loan application is considered fraud.”
Audio file of Alaina Nicholson, director of consumer affairs, FCNB
Media Contact:
1 866 933-2222 or media@fcnb.ca.
FCNB has the mandate to protect consumers and enhance public confidence in the financial and consumer marketplace through the provision of regulatory and educational services. It is responsible for the administration and enforcement of provincial legislation regulating mortgage brokers, payday lenders, real estate, securities, insurance, pensions, credit unions, trust and loan companies, cooperatives, and a wide range of other consumer legislation. It is an independent Crown corporation funded by the regulatory fees and assessments paid by the regulated sectors. Online educational tools and resources are available at www.fcnb.ca.
Source: FCNB
