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Buy now pay later in Canada plans: Introduction

The holiday shopping season is over. Your bills have arrived. A buy now pay later in Canada program attracted many Canadians. In Canada, people may not realize that they are borrowing money to pay for their purchase when they opt for a buy now pay later in Canada plan. Such a financial product is also known as a BNPL, instalment loan, or retail credit services. A BNPL is a credit product that is best suited for purchases of large-ticket items such as furniture, televisions, and home appliances. This kind of payment option is available both from brick and mortar retailers and for online shopping too.

The buy now pay later in Canada industry is pumping out millions of dollars, as many people rush to buy big-ticket items. However, many people can’t afford to pay for these items, and the buy now pay later in Canada industry is swallowing these people up. We are talking about people who have a bad credit score, unpaid bills, could not pass credit checks and just plain don’t have the money.

In this Brandon Blog, I discuss how for some people a buy now pay later in Canada plan might be too good to be true as there are hidden risks.

buy now pay later in canada

What is a buy now pay later in Canada plan?

The buy now pay later in Canada plan is popular with consumers who don’t qualify for a credit card or other financing, but who would still like to purchase a large item and spread out the payments. Customers can make purchases and pay them back at a future date, often interest-free, using this short-term financing vehicle.

Examples of BNPL agreements include:

an agreement where the purchaser commits to purchase a product or service from the retailer;
the retailer’s agreement with a lender to finance purchases;
the customer’s agreement with a financial service provider which usually specifies:
- The amount of each monthly payment.
- Payment frequency.
- The number of payments.
- Rate of interest. If there is an interest-free period, the rate of interest upon default of making either a monthly payment or paying off the balance on time.
- Any fees.
- The payment method.

Retailers can obtain BNPLs from a variety of financial service providers. This type of financing option is available from financial institutions, such as banks, credit unions, caisses populaires, financing companies and money services businesses, including fintech.

buy now pay later in canada

Buy now pay later in Canada plan: Here are some things to consider before choosing to use one

With a buy now pay later in Canada plan, you can pay for nearly any large household item such as appliances, furniture, a furnace, or a central air conditioning system. BNPLs have their advantages for some people. These plans have the risk of getting you into uncontrollable debt very (very) quickly.

Pros of buy now pay later in Canada plans

Buy now pay later in Canada programs offer consumers some benefits. No fees, no interest, and you know that unlike with a credit card, the full amount of your purchase will not hit you all at once. Retailers bear the fee involved.

A soft credit inquiry is all that is required to approve a buy now, pay later loan. A soft credit check with the major credit bureaus does not impact your credit score. Furthermore, BNPLs have the advantage of being different from traditional layaways. Layaway plans entail making a down payment to the seller and paying a small amount each week for the balance. Only after you have fully paid for the item can you take it out of the store. A BNPL allows you to leave with your item or have it delivered so that you can use it immediately without paying the entire purchase price.

A buy now pay later in Canada plan allows consumers to obtain instant gratification.

Cons of buy now, pay later plans

A BNPL is ideal for those who can make all the payments on time and pay the outstanding balance in full on the due date. It is also good for those who have a steady income and the discipline to make sure the entire amount is paid off at the end of the interest-free period. There are unfortunately more cons than pros to a buy now pay later in Canada plan.

They are:

Depending on your payment history, as well as the policies of the retailer, financial tech companies set limits on the amounts you can defer.
It’s convenient to spread payments out, however, there are fewer protections than if you used a credit card.
BNPL programs also present the risk that those seemingly affordable payments may lead you to splurge.
The BNPL statement is strangely designed. According to one buy now pay later in Canada study, two-thirds of those who fell behind said they simply forgot about the payments, not that they did not have the cash.
In lending, a company wants to make sure the consumer can handle the new account and will be able to repay it. An unpaid buy now, pay later balance will be sent to collections, damaging your credit.
By transforming one big price tag into an array of smaller payments, deferred payment plans in BNPLs lower sticker shock. Impulse spending goes up as a result.
This can lead to a rapid accumulation of debt. You may forget how much you need to set aside for your BNPL payments if you’re not tracking your expenses and budgeting.
Not all BNPLs require regular payments. They instead require the sum to be paid by a certain date in the future (usually 6-12 months from the time of purchase). Notices, reminders, and invoices may not be sent until almost the end of the period. Once the BPNL due date passes, the full sum becomes due, plus interest and late payment charges and fees for missed payments.

Buy now pay later in Canada: 8 Options when you buy now and can’t pay later

During the interest-free period, you can spread out large expenses over a period of time, but you should be ready to pay the full balance by the due date. If you cannot pay off the balance on your account after the interest-free period expires, what are your options? Unemployment or a family emergency may have changed your financial situation due to circumstances beyond your control.

Here are some options you can consider:

Speak with your lender. There may be a financial hardship program that you can utilize, enabling you to get more deferrals and thus more breathing room. Changing the due dates may also be an option.
Take a look at your finances and household budget to see where opportunities exist. Focus on saving money in other areas while prioritizing essentials like housing, food, utilities, and medicine.
Let go of the purchased item. You might be able to return the item to the merchant for a refund. Although some buy now, pay later companies do not refund interest payments, you may be able to get your money back. During the refund process, payments may still be due. Consider selling the item to recoup some of the money if a merchant won’t accept a return. Online marketplaces, apps or websites may help you find a buyer. It’s important to understand the terms before listing an item on an online marketplace since they may take a cut of the sale.
Get a side gig to make money. Increasing your work hours or earning supplemental income through a side job, such as driving for a rideshare company or delivery service, can help you pay down your buy now, pay later debt faster.
Perhaps you can qualify for a debt consolidation personal loan if your credit score is good enough in order to reduce the interest charges on all high-interest rate debts, such as credit card debt. The cash you free up can be used to pay off the BNPL.
Contact a non-profit credit counselling agency for free help. Avoid going to a for-profit debt relief company.
To discuss your realistic options, contact a licensed insolvency trustee for a no-cost consultation.

Buy now pay later in Canada plan: Summary

In summary, you may find that getting a buy now pay later in Canada plan is a good option for you and your financial situation. A buy now pay later plan could help you with those unforeseen expenses, such as when an old furnace breaks down for good. Just make sure you understand everything involved in the buy now pay later plan before signing up, and you can see yourself being able to be debt-free when the interest-free period ends.

I hope you found this buy now pay later in Canada Brandon Blog informative. Although nothing is guaranteed, managing your debt in a way that will allow you to be able to afford it, will lead to your financial success. It will also give you the best shot at having a financially stress-free life.

Are you or your company in financial distress and a debt crisis? Are you embroiled in costly litigation or a crushing debt load and need a time out in order to restructure? Do you not have adequate funds to pay your financial obligations as they come due? Are you worried about what will happen to you? Do you need to search out what your debt relief options and realistic debt relief solutions for your family debt are? Is your company in financial hot water?

Call the Ira Smith Team today. We have decades and generations of experience assisting people looking for life-changing debt solutions through a debt settlement plan and AVOID the bankruptcy process.

As licensed insolvency professionals, we are the only people accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a Government of Canada-approved debt settlement plan to do that. It is an alternative to bankruptcy. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.

Call the Ira Smith Team today so you can eliminate the stress, anxiety, and pain from your life that your financial problems have caused. With the one-of-a-kind roadmap, we develop just for you, we will immediately return you right into a healthy balanced problem-free life.

You can have a no-cost analysis so we can help you fix your troubles.

Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

Credit report Ontario: Introduction

My Brandon’s Blog describes a Court decision that if you owe money, even if it is too late for you to be sued, it can still show up on your credit report Ontario. This is a very interesting case from the Court of Appeal for Ontario for consumers and consumer reporting.

The case was an attempt by Mr. Grant to have the credit reporting agencies Equifax and TransUnion remove from his credit report debts that were more than two years old on the basis that because he can’t be sued anymore, the most accurate reporting would be to cut those debts from his credit report. He argued that since the Ontario Limitations Act provided for a two-year limitation for when he could be sued on certain debts, therefore, any debts more than two years old for which you haven’t been sued should be removed from his credit report.

Limitations Act vs. Consumer Reporting Act

The credit reporting agencies successfully argued against that as the lower court ruled against Mr. Grant. He was now appealing to the Court of Appeal for Ontario. The Ontario Consumer Reporting Act states that debts up to seven years old can be reported and there lies the discrepancy. The Court of Appeal for Ontario agreed with the lower court and said that just because the Limitation Act says that you can’t be sued after two years that has no application to the Consumer Reporting Act that says all valid debts can be reported for up to seven years.

What the Court of Appeal said

The Court of Appeal went on to say just because a creditor misses the deadline or chooses not to sue within the two-year period it doesn’t mean that the debt still isn’t owed. The Court of Appeal also went on to say that under the Consumer Reporting Act people have the right to communicate with Equifax and TransUnion to have errors removed from their credit report. Unfortunately for Mr. Grant in his case, this was not an error.

What should you do if you have too much debt?

Do you have too many debts causing you discomfort on your credit report? Is your credit report creating a bigger hardship for yourself? For help with your debt issues contact Ira Smith Trustee & Receiver Inc. We’re your best defence against debt. Make an appointment for a free, no-obligation consultation and you can be well on your way to a debt free life Starting Over, Starting Now. Give us a call today.

Credit Report Ontario: The decision of the Court of Appeal for Ontario

COURT OF APPEAL FOR ONTARIO

CITATION: Grant v. Equifax Canada Co., 2016 ONCA 500

DATE: 20160623

DOCKET: C61664

Rouleau, van Rensburg and Benotto JJ.A.

BETWEEN

Gary Grant

Applicant (Appellant)

and

Equifax Canada Co., Trans Union of Canada,

Ministry of Government Services and Consumer Services

Respondents (Respondents in Appeal)

Gary Grant, acting in person

Stephen Schwartz, for Equifax Canada Co.

Alan Melamud, for Trans Union of Canada

Domenico Polla, for the Ministry of Government Services and Consumer Services

Mahmud Jamal and Raphael Eghan, for the intervener Canadian Bankers Association

Heard: June 21, 2016

On appeal from the judgment of Justice Kofi N. Barnes of the Superior Court of Justice, dated November 2, 2015.

ENDORSEMENT

[1] The appellant brought an application in the Superior Court seeking an order that two consumer reporting agencies remove debts over two years old that were shown on his credit report, where no legal action had been commenced or judgment obtained in respect of the debts. He relied on the provisions of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, and in particular the basic limitation period of two years applicable to the commencement of a proceeding in respect of a claim.

[2] The appellant argued in the court below, and on appeal, that this two year limitation period should apply in interpreting the provisions of the Consumer Reporting Act, R.S.O. 1990, c. C.33 (the “CRA”). He asserts that, in requiring consumer reporting agencies to adopt all procedures reasonable for ensuring accuracy and fairness in the contents of their consumer reports (s. 9(1) of the CRA), the Act anticipates that debts will not be listed where a limitation period for their enforcement through legal action has expired. The most accurate record of a debt, he says, is one that has been or can be confirmed by an order or judgment of the court. When debts are included in consumer reports, where no legal action is possible, consumers are adversely impacted in their efforts to borrow money and to conduct other business.

[3] The respondents assert that the application judge did not err in his dismissal of the appellant’s application, on the basis that the basic limitation period has no application to the statutory framework for consumer credit reporting in Ontario, and that there was no violation by the consumer reporting agencies of the requirements of the CRA.

[4] We agree.

[5] The CRA provides for a regulatory scheme for the fair reporting of information regarding an individual’s history of credit activities. The CRA requires the registration of consumer reporting agencies, permits consumer reporting information to be provided only for certain prescribed purposes, and sets out standards for consumer reporting.

[6] The Limitations Act, 2002, by contrast, applies to bar “claims pursued in court proceedings” that are commenced outside the applicable limitation period. The Act does not apply to the CRA, whether expressly or by implication. Indeed, the CRA contains its own specific provisions prohibiting the inclusion of certain information in consumer reports, including debts or collections more than seven years old, unless confirmation that the debt or collection is not barred has been obtained. The CRA expressly contemplates that debts not reduced to judgment that are up to seven years old may be reported (see s. 9(3)(f)). This makes sense, as the passing of a limitation period does not extinguish a debt; it only precludes the commencement of a court proceeding for its enforcement. As such, the reporting of debts after a limitation period has passed, is not inconsistent with the purposes of the CRA, and is expressly contemplated by its terms.

[7] Under the Act, consumers, such as the appellant, have access to the information contained in their files, and a mechanism by which they can dispute information contained in a report to the consumer reporting agency, and to the Registrar of Consumer Reporting Agencies, with a right to apply to the Licence Appeal Tribunal for a hearing if they are aggrieved by a Registrar’s decision.

[8] The appellant availed himself of the right to dispute information, and was able to have certain stale information removed from his consumer reports. There was no basis, however, for requiring the removal of information concerning debts simply because they were more than two years old.

[9] For these reasons, the appeal is dismissed.

“Paul Rouleau J.A.”

“K. van Rensburg J.A.”

“M.L. Benotto J.A.”