Choosing a private lender

When the bank says no, many people turn to a private lender. Some are sound businesses. Others pose as lenders to get your money or your personal information. A few checks usually tell them apart. Here they are.

What a private lender is

A private lender is any lender that isn’t a bank or a credit union: a finance company, an online lending business, sometimes an individual. Its criteria may differ from a bank’s. Its obligations are still real: consumer loans fall under your province’s consumer protection laws, and the Criminal Code applies across Canada.

Money911 is not a private lender. Money911 is your co-borrower; a separate lender provides the loan. To find out who we are, read Who is Money911?

Checking identity and licence

A sound lender tells you who it is. Before you fill in any form, look for:

• its legal name, not just a brand name
• a full business address, not just a post office box
• a phone number where someone answers
• its permit or licence number, if it needs one

Rules depend on your province. In Québec, a finance company or other money lender generally needs a money lender’s permit from the Office de la protection du consommateur, even if it only does business online. Banks and credit unions don’t need this permit. The Office’s Get Information About a Merchant tool shows whether a money lender holds the permit it needs. If it doesn’t, the Office advises you to avoid doing business with it.

Elsewhere in Canada, the Canadian Anti-Fraud Centre suggests contacting your provincial consumer protection agency to confirm that a company is a legitimate lender.

And Money911? Money911 is a co-borrower service run by 14802675 Canada Inc., with a place of business in Québec City. We are not the lender. The applicable terms are set out in the contract the lender sends.

Warning signs

Any one of these is a reason to stop and check.

• A yes promised in advance. No serious lender can promise to accept a request it hasn’t reviewed. In Québec, the lender is required to evaluate your ability to repay the loan.
• A payment before the loan. The scheme is well known: you’re told the loan is approved, then asked to pay a fee to release it. Once the money is sent, the loan never arrives. The Canadian Anti-Fraud Centre puts it plainly: you should never send money first.
• An odd way to pay. Asked to pay that fee by email money transfer, through a money transfer business or with prepaid credit cards? The Canadian Anti-Fraud Centre says to end all contact.
• Your banking login. A lender asks for your online banking username and password by email, text or phone. At Money911, by contrast, instant bank verification sends us a read-only copy of your statement. We never see your username or password.
• Pressure. An offer that’s “good today only,” or a contract you’re pushed to sign before you’ve read it.
• No written contract. The terms of your loan should be in writing before you sign anything.
• A rate quoted by the week or the month. Ask for the annual rate, with all charges included. Canada’s Criminal Code sets a maximum annual rate for loans, and it counts the charges paid for the credit, not only interest (section 347).
• An offer you didn’t ask for. A loan offer that reaches you by text message or on social media, out of the blue.

Not sure? Don’t pay anything and don’t sign anything. If you think it’s fraud, report it to the Canadian Anti-Fraud Centre.

Reading the contract and total cost

The contract is what binds you. In Québec, the Office de la protection du consommateur lists what a money loan contract must show. It makes a good checklist wherever you live:

• the lender’s name and address, and its permit number if it needs one
• the amount borrowed
• the total credit charges, split between interest and other charges
• the credit rate: all the credit charges, expressed as a yearly percentage
• the length of the contract
• your total obligation: the amount borrowed plus all the credit charges
• the date and amount of each payment, and how many there are
• your right to repay all or part of the loan early, without fees or penalty

Look at the total obligation first: it’s what you’ll have repaid by the end. Then check that the payment dates line up with your paydays. Ask your questions before you sign, not after. Source: Office de la protection du consommateur, Consumer Tips: Before You Borrow.

Questions to ask before you sign

• What is the credit rate, and which charges does it include?
• How much will I have repaid in total?
• How many payments are there, and on which dates?
• What happens if a payment is returned or late?
• Can I pay the loan off early, without fees or penalty?
• Who do I call if a payment gets hard?

A sound lender answers each of these clearly, and in writing if you ask.

With Money911, the applicable terms are in the contract the lender sends you. Read it before you sign: no payment or advance is required at signing. A question? Call us.