Debt in Auto Financing

Omar Ha-Redeye was quoted in The Globe on April 9, 2020 in How auto finance is driving Canadians into debt,

Extended-term, high-interest auto loans are especially onerous for borrowers who live in rural areas where having a car is a necessity of life, said Omar Ha-Redeye, a lawyer at Toronto-based Fleet Street Law.

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Some consumer-law experts worry auto-loan debt could soon become more of a burden for well-qualified, higher-income borrowers as well. Scores of Canadians who moved to the suburbs and smaller communities during the pandemic in search for greater housing affordability are now more dependent on their vehicles, Mr. Ha-Redeye noted.

“This is especially true as employers are pushing for workers to return to the office, which increases further the needs of many Canadians to own a car in order to earn a living,” he said.

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Ontario is considering regulations for so-called high-cost credit products, which would include high-interest auto loans offered by independent lenders, according to Mr. Ha-Redeye. Currently, only British Columbia, Alberta, Manitoba and Quebec have legislation specifically devoted to high-cost credit.

Still, the fact that auto dealers often arrange financing on behalf of lenders creates regulatory and oversight gaps, Mr. Ha-Redeye said. Across Canada there are few standards and rules around how dealers, who are regulated provincially, place those loans, he said.