Online loans have become a go-to solution for many Canadians facing financial hiccups. If you need quick access to cash, you no longer need to stand in long lines at banks or fill out lengthy paperwork to submit an application. Online loans make it simpler for borrowers to quickly access cash when needed for unexpected expenses.
Although online loans are a popular borrowing method, it’s important to note that not every online lender has your best interests. In fact, there are many scammers out there waiting to prey on individuals who need cash. According to a 2022 CTV News article, The Better Business Bureau – serving Southern Alberta and East Kootenay – revealed that scammers are targeting victims struggling to pay bills by dressing up as money lenders and offering a loan. They either provide unsolicited offers, require an advance fee payment, or are not based where you live.
The good news is you can avoid these scams and confidently borrow money when you know how to avoid fraudulent lenders with the following tips.
Red Flags to Watch Out For
- Unrealistic Promises: If an online lender guarantees approval before you fill out an application or promises unbelievably low-interest rates, proceed with caution. Legitimate lenders will assess your situation before confirming that you are eligible.
- Upfront Fees: In Canada, legitimate lenders generally don’t charge upfront fees. If you’re asked to pay a fee before receiving your loan, it’s likely a scam and it’s important that you don’t send them any money.
- No Contact Information: Reputable lenders have multiple ways to contact them. Be wary if a lender only provides an email address or a non-existent phone number.
- Pressure Tactics: Scammers often use high-pressure tactics to rush you into making a decision. Legitimate lenders give you time to review terms and conditions before signing anything.
- Unsecure Websites: Always check for the padlock symbol in the website’s address bar. Secure websites start with “https://” – the ‘s’ stands for secure.
Verifying the Legitimacy of Online Lenders
- Check the Registry: In Canada, all legitimate lenders must be registered in their province or territory. When looking for legitimate online loans in Canada, you can verify a lender’s registration through the government’s online registry.
- Read Reviews and Testimonials: Do a quick online search to find reviews and testimonials from other borrowers. Genuine lenders will have a positive track record.
- Contact Information: Legitimate lenders will always provide clear contact information. Give them a call to ask questions and gauge their professionalism.
Protecting Your Personal Information
- Use Secure Wi-Fi: When applying for an online loan, use a secure Wi-Fi connection. Public networks can expose your personal information to hackers.
- Beware of Phishing Emails: Scammers often send emails pretending to be from legitimate lenders, asking for your personal information. Never click on links in such emails; instead, directly visit the lender’s official website.
Monitor Your Accounts: Regularly monitor your bank accounts and credit reports for suspicious activity. This helps you catch any unauthorized transactions early. In the event that you feel that a lender is scamming you, make sure to report the case to the Canadian Anti-Fraud Centre.