Before signing a loan agreement, you should be able to understand how much the credit will cost and how repayment will work<\/strong>.<\/p>\n A cost of borrowing disclosure in Canada<\/strong> can show important information such as the interest rate, annual percentage rate (APR), payment amount, payment schedule and applicable fees.<\/p>\n For federally regulated financial institutions, Canadian consumer-protection rules require certain information about loans and other credit products to be disclosed clearly. The exact requirements depend on the type of credit and financial institution. Provincial or territorial rules may apply when you borrow from other types of lenders.<\/p>\n Understanding these disclosures gives you a better chance of spotting expensive borrowing, unexpected fees or repayment terms that don’t fit your budget.<\/p>\n This is one part of your broader borrower rights in Canada<\/a><\/strong>.<\/p>\n A cost of borrowing disclosure explains important information about the credit you’re considering.<\/p>\n It isn’t simply a document telling you the interest rate.<\/p>\n Depending on the loan and lender, disclosure information may include:<\/p>\n FCAC’s example information box<\/a><\/strong> for a fixed-rate personal loan includes the principal amount, annual interest rate, APR, term, date funds are advanced, payments, amortization, prepayment information and other fees.<\/p>\n The purpose is to give you important information about the credit agreement so you can understand what you’re agreeing to.<\/p>\n The interest rate and APR aren’t necessarily the same thing.<\/p>\n Your annual interest rate<\/strong> tells you the rate of interest charged on the loan.<\/p>\n The annual percentage rate (APR)<\/strong> shows the cost of borrowing as a yearly rate and can include applicable non-interest charges.<\/p>\n This makes APR particularly useful when comparing credit products.<\/p>\n For example, two loans could advertise similar interest rates but have different borrowing costs if one has additional charges that are included when calculating APR.<\/p>\n Don’t compare loans using the advertised interest rate alone.<\/p>\n Look at:<\/p>\n If you’re comparing borrowing options, our personal loans in Canada<\/a><\/strong> page explains other factors to consider.<\/p>\n For credit agreements with federally regulated financial institutions, the timing of the initial disclosure depends on the type of credit.<\/p>\n For credit agreements other than loans secured by a mortgage on real property<\/strong>, federal regulations generally require the initial disclosure statement to be provided on or before the earlier of:<\/p>\n Different timing rules apply to loans secured by a mortgage on real property.<\/p>\n The Financial Consumer Agency of Canada (FCAC)<\/a><\/strong> also recommends taking the time to read and understand a personal loan’s terms and conditions before signing.<\/p>\n Provincial or territorial requirements may apply when you’re dealing with a lender that isn’t federally regulated, so the exact disclosure rules aren’t identical for every loan in Canada.<\/p>\n For a fixed-rate personal loan from a federally regulated financial institution, the information can include important details about the cost and repayment of the loan.<\/p>\n A useful disclosure should allow you to answer questions such as:<\/p>\n How much am I borrowing?<\/strong> What interest rate am I paying?<\/strong> What is the APR?<\/strong> How much are my payments?<\/strong> How long will I be repaying the loan?<\/strong> What other fees apply?<\/strong> Can I repay the loan early?<\/strong> FCAC<\/strong><\/a> says federally regulated institutions must provide required information using language that is clear, simple and not misleading<\/strong>.<\/p>\n The information you receive can also depend on whether your loan has a fixed or variable interest rate.<\/p>\n With a fixed-rate loan<\/strong>, the interest rate generally stays the same for the agreed period.<\/p>\n With a variable-rate loan<\/strong>, the rate can change.<\/p>\n FCAC explains that additional information may need to be provided for variable-rate personal loans, including information about payments and the cost of borrowing. Where the rate is linked to another rate, such as prime, additional ongoing information may also be required.<\/p>\n This matters because the payment or time required to repay a variable-rate loan may change as interest rates change.<\/p>\n Lines of Credit work differently from fixed loans, so their disclosures are different too.<\/p>\n For example, federal cost-of-borrowing rules<\/a><\/strong> for certain federally regulated institutions require initial Line of Credit disclosure to include information such as:<\/p>\n There are also ongoing disclosure requirements.<\/p>\n If you’re considering revolving credit, see our Line of Credit Canada<\/a><\/strong> page for an explanation of how these products work.<\/p>\n This is one of the easiest mistakes to make when comparing loans.<\/p>\n Imagine Loan A has a slightly lower advertised interest rate than Loan B.<\/p>\n That doesn’t automatically mean Loan A will cost you less.<\/p>\n You also need to consider:<\/p>\n This is why disclosure information is so important.<\/p>\n It gives you more than one number to compare.<\/p>\n Before accepting a loan, check:<\/p>\n If something doesn’t match what you were told during the application process, don’t assume the agreement is correct just because it has been presented for signature<\/strong>.<\/p>\n Ask the lender to explain the difference before you accept the credit.<\/p>\n First, ask the lender for clarification and keep copies of:<\/p>\n If you’re dealing with a federally regulated financial institution and believe it hasn’t followed its disclosure obligations, you can use its complaint-handling process.<\/p>\n FCAC supervises federally regulated financial institutions, but the appropriate complaint route can differ for provincially regulated lenders.<\/p>\nWhat Is a Cost of Borrowing Disclosure?<\/h2>\n
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![\"Information](\"https:\/\/www.fatcatloans.ca\/blog\/wp-content\/uploads\/2026\/09\/What-a-Cost-of-Borrowing-Disclosure-Should-Show.png\")
<\/p>\nWhy the APR Matters<\/h2>\n
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When Must You Receive the Disclosure?<\/h2>\n
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What Should a Personal Loan Disclosure Tell You?<\/h2>\n
\nCheck the principal amount rather than simply the amount you expect to receive.<\/p>\n
\nLook for the annual interest rate and how it applies.<\/p>\n
\nDon’t automatically assume this will always be identical to the stated interest rate.<\/p>\n
\nCheck both the amount and frequency.<\/p>\n
\nA smaller payment can look attractive but may come with a longer repayment period.<\/p>\n
\nLook for applicable charges rather than focusing only on interest.<\/p>\n
\nCheck the agreement for applicable prepayment rights or charges.<\/p>\nFixed-Rate vs Variable-Rate Loan Disclosures<\/h2>\n
![\"Fixed](\"https:\/\/www.fatcatloans.ca\/blog\/wp-content\/uploads\/2026\/09\/Fixed-Rate-vs-Variable-Rate-Loan-Disclosures-e1789544033552.png\")
<\/p>\nWhat About Lines of Credit?<\/h2>\n
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Don’t Confuse the Interest Rate With the Total Cost<\/h2>\n
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8 Things to Check Before Signing a Loan<\/h2>\n
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What If the Lender Doesn’t Give You Clear Disclosure?<\/h2>\n
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![\"Borrower](\"https:\/\/www.fatcatloans.ca\/blog\/wp-content\/uploads\/2026\/09\/Your-Rights-as-a-Borrower-in-Canada-e1789544091891.png\")
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