Things to think about when choosing a loan or other financial service

If you need to borrow money, here are some questions to consider before deciding which type of loan or other financial service is best for you.

  • Can I borrow money from family or friends?
    • This could mean you don’t need to take out a loan at all or that you need to borrow less money.
  • What are the costs?
  • What is the smallest loan I need?
    • Try not to be tempted by offers of more money than you need to borrow – they will cost you more.
  • How will I pay back the loan?
  • How long is the term of the loan?
  • Am I doing business with an actual lender?
  • Where can I get advice on debts?
  • Consider speaking with a free credit counselling service in advance of taking out a loan or if you are finding it difficult to budget for, or pay back, a loan.

Additional tips

  • Compare interest rates and fees across different lenders, to ensure you get the lowest rate – if you are unable to find a lender’s rate, ask for it
  • If you’re thinking about getting a payday loan, look up the lender on the Consumer Protection BC website to ensure they are licensed and to see if they have been investigated or penalized for any illegal practices
  • Consider alternatives to an expensive loan or other high-cost financial service

Lead generators

If you are thinking of taking out a loan or using other financial services, beware of “lead generators”. These are businesses that typically operate online. They might appear to be lenders, but they are actually asking for your personal and financial information so that they can sell it to lenders or other lead generators.

You might not know what a lead generator will do with your information or who they will give it to, and they might not connect you with a lender who can meet your needs.

How can I tell if I am dealing with a lead generator?

Some ways to identify whether you are dealing with a lead generator are to:

  • Ask if the business will be lending the money themselves, or providing your information to another business/lender - if you do not get a clear answer or you are not comfortable with the answer, do not continue with them
  • Review any paperwork carefully before signing or submitting it (including online paperwork)
  • Ask for a copy of the business’ privacy policy, to determine what they will do with your information. If there is anything in the policy that you don’t understand, ask to have it explained
  • Search for online reviews of the company

Once you know who you are dealing with and how they will use your information, you can make an informed decision about whether to continue.