Choosing a Lender
How do you know who to trust with your finances? How do you know which loan is best for your needs?
It would be simple to select the first lender that pops up in your online search, but taking out a loan is serious business. This is why it's in your best interest to do your homework before deciding to conduct business with a lender. Agreeing to loan terms that you don’t understand can do more harm than good. As you select your lender, it’s very important that you understand the basics of your loan. So, educating yourself is a first step in managing your debt.
The two types of loans we are going to focus on are payday loans and installment loans. A payday loan is a short-term loan designed to provide additional cash flow between pay periods. It’s like advancing your pay date, which is why you might see the term "cash advance." You simply borrow cash for a set period of time and pay the money back plus the applicable fees on your next pay date. It’s important to know that payday loans should be used for short-term financial needs only, not as a long-term financial solution. An installment loan is a loan that is repaid over time with interest in several payments (or installments). Unlike payday loans, most lenders will require a credit check before approving an installment loan, and paying back the loan on time can help build credit history.
Here's a list of important things to research about a lender and their loans:
- Ensure that your potential lender is a legitimate loan provider, with an appropriate provincial/state licence.
- Ask if the lender has privacy and confidentiality policies to protect your personal information.
- Find out if your lender is registered with the Better Business Bureau and look into their business reputation.
- Ensure that you understand the exact cost of your loan. Look for transparency with no hidden fees.
- Find out how fast the company can get you funded to handle your financial emergency.
- Make sure the lender has customer service support to assist with your questions and/or concerns.
- Ensure that you meet all of the basic loan qualifications (as a borrower).
- Is there a user-friendly application process?
- Are you more comfortable visiting a branch location or prefer an online loan?
- Are you in need of immediate cash, or do you want the money deposited into your account?
Money Mart® is a founding member of the Canadian Consumer Finance Association, an industry leading group fostering best business practices and consumer protection. Once you have considered this information, we hope that you will try us or use a reputable lender to fulfill your needs. Canadians have trusted us for over 30 years with their everyday financial solutions.