In NB, what should I know about late payment fees for car loans?

In New Brunswick, as across Canada, lenders typically apply late payment fees if your car loan payment is not received by the due date, often after a short grace period, usually ranging from 5 to 15 days. The exact amount of these fees, which can be a fixed charge (e.g., $25-$50) or a percentage of the overdue amount, along with the grace period, must be clearly and conspicuously disclosed in your loan agreement, as required by provincial consumer protection legislation. While New Brunswick does not set a specific provincial cap on these administrative late fees for car loans, they are generally expected to be reasonable and reflect the lender's administrative costs associated with the late payment.

Understanding these terms is paramount for consumers. Beyond the immediate financial burden of the fee itself, late payments are reported to credit bureaus, significantly damaging your credit score. In the current economic climate heading into 2025, a lower credit score can lead to higher interest rates on future loans, difficulty obtaining other forms of credit, or even impact insurance premiums. Repeated late payments can escalate to default, potentially leading to vehicle repossession and further legal action. Therefore, it is critical to thoroughly review your loan contract for these clauses and, if facing financial difficulty, proactively contact your lender to explore options before a payment becomes overdue.