• 3. (1) For the purpose of section 569 of the Act, the cost of borrowing for a loan under a credit agreement, other than a loan obtained through the use of a credit card or line of credit, is to be expressed as an annual rate on the principal, as follows:

  APR = (C / (T × P)) × 100

  where

  APR 

  is the annual percentage rate cost of borrowing;

  C 

  is an amount that represents the cost of borrowing within the meaning of section 5 over the term of the loan;

  P 

  is the average of the principal of the loan outstanding at the end of each period for the calculation of interest under the credit agreement, before subtracting any payment that is due at that time; and

  T 

  is the term of the loan in years, expressed to at least two decimal points of significance.

• (2) For the purpose of the APR calculation under subsection (1),

  • (a) the APR may be rounded off to the nearest eighth of a per cent;

  • (b) each instalment payment made on a loan must be applied first to the accumulated cost of borrowing and then to the outstanding principal;

  • (c) a period of

    • (i) one month is 1/12 of a year,

    • (ii) one week is 1/52 of a year, and

    • (iii) one day is 1/365 of a year;

  • (d) if the annual interest rate underlying the calculation is variable over the period of the loan, it must be set as the annual interest rate that applies on the day that the calculation is made;

  • (e) if there are no instalment payments under a credit agreement, then the APR must be calculated on the basis that the outstanding principal is to be repaid in one lump sum at the end of the term of the loan; and

  • (f) a credit agreement for an amount that comprises, in whole or in part, an outstanding balance from a prior credit agreement is a new credit agreement for the purpose of the calculation.

• (3) For the purpose of section 569 of the Act, the cost of borrowing for a loan obtained under a credit card agreement or line of credit is to be expressed as an annual rate, as follows:

  • (a) if the loan has a fixed annual interest rate, that annual interest rate; or

  • (b) if the loan has a variable interest rate, the annual interest rate that applies on the date of the disclosure.

4. The APR for a credit agreement is the annual interest rate if there is no cost of borrowing other than interest.

• 5. (1) Subject to subsection (2), the cost of borrowing for a loan under a credit agreement, other than an agreement for a credit card or line of credit, consists of all the costs of borrowing under the loan over its term, in particular the interest or discount that applies to the loan in accordance with section 567 of the Act, and including the following charges:

  • (a) administrative charges, including charges for services, transactions or any other activity in relation to the loan;

  • (b) charges for the services, or disbursements, of a lawyer or notary that an authorized foreign bank required the borrower to retain;

  • (c) insurance charges other than those excluded under paragraphs (2)(a), (f) and (h);

  • (d) charges for a broker, if the broker’s fees are included in the amount borrowed and are paid directly by the authorized foreign bank to the broker; and

  • (e) charges for appraisal, inspection or surveying services, other than those mentioned in paragraph (2)(g), related to property that is security for a loan, if those services are required by the authorized foreign bank.

• (2) The cost of borrowing for a loan does not include

  • (a) charges for insurance on the loan if

    • (i) the insurance is optional, or

    • (ii) the borrower is its beneficiary and the amount insured reflects the value of an asset that is security for the loan;

  • (b) charges for an overdraft;

  • (c) fees paid to register documents or obtain information from a public registry about security interests related to property given as security;

  • (d) penalty charges for the prepayment of a loan;

  • (e) charges for the services, or disbursements, of a lawyer or notary, other than those mentioned in paragraph (1)(b);

  • (f) charges for insurance against defects in title to real or immovable property, if the insurance is paid for directly by the borrower;

  • (g) charges for appraisal, inspection or surveying services provided directly to the borrower in relation to property that is security for a loan;

  • (h) charges for insurance against default on a high-ratio mortgage or hypothec;

  • (i) fees to maintain a tax account that are

    • (i) required for a mortgage or hypothec referred to in paragraph (h), or

    • (ii) optional;

  • (j) any fee to discharge a security interest; or

  • (k) default charges.