Whether you want to buy a car or need some extra cash to cover an emergency, a loan can help. While there are numerous banks that offer loans, those with bad credit or poor finances aren’t always able to qualify. In such cases, many Canadians with bad credit will turn to alternative lenders. Unfortunately, it isn’t always easy to which lender is legitimate. Find out how to check if a company is legitimate in Canada?
How To Check If A Company Is Legitimate In Canada
Here are a few ways to make sure the lender you’re working with is trustworthy before committing yourself to a loan agreement:
How To Check If A Company Is Legitimate In Canada: Do Some Online Research
The first thing you should do when you are trying to find out if a loan company is legitimate is to do some online research. Heading over to Google and looking up the company name is a good place to start. This could give a ton of information about the company and what others are saying about it.
How To Check If A Company Is Legitimate In Canada: Check The BBB
You can also run their name and site through services like the Better Business Bureau to see if they’re accredited. The Better Business Bureau (BBB) is another resource you can use to verify the legitimacy of a lender. Previous customers can report lenders for unfair treatment if they’ve had bad experiences, while others may report good experiences. Just be wary of companies with no reviews, as this could be indicative of a scam.
How To Check If A Company Is Legitimate In Canada: Make Sure They Have An Actual Office And Real-Life Presence
While a nice site and testimonials are great, scams are becoming increasingly sophisticated. When trying to determine if a company is legitimate, it’s important to check their real-life presence by verifying their location and phone number.
If the loan company you work with has an office and employees and a customer service phone line, it gives you that little bit of extra reassurance that they are a legit loan company. If the company has no office, has no evidence of real employees and provides no phone number, you should probably look elsewhere, as there is no way for you to confirm that they are indeed a real loan company.
While there are plenty of legitimate online-only loan companies, you have to be cautious in that space as it can be hard to differentiate between ones that are legitimate and which ones are not.
How To Check If A Company Is Legitimate In Canada: Secure Website
When applying for a loan, you need to supply the lender with plenty of sensitive information about your personal profile and financial health. As such, you want to make sure that the website you’re inputting this data into is secure and not vulnerable to third parties with bad intentions.
Legitimate lenders’ websites should securely encrypt client information with a robust layer of protection that will bar outsiders from accessing your personal and financial data. In most cases, websites that are secure will have a padlock sign to the left of your address bar.
How To Check If A Company Is Legitimate In Canada: Check The Customer Reviews
A quick and simple way to find out if the lender is legitimate is to conduct an online search to see what previous clients have to say about their experiences. Ideally, there should be ample reviews, as it’s hard to fake thousands of reviews
Other Ways On How To Check If A Company Is Legitimate In Canada
There are other resources to check out to verify whether or not a lender is trustworthy before signing a loan contract:
- FCAC or CCFA Complaint Directory. Besides the BBB, you can also check out the Financial Consumer Agency of Canada (FCAC) or the Canadian Consumer Finance Association (CCFA). These are government offices that keep a log of customer complaints for various entities.
- Trustpilot. Many Canadians use Trustpilot to review various types of companies and services, including lenders in Canada. Thousands of new customer reviews are added to the site every month, so you can get the most recent and up-to-date reviews on a lender you’re considering working with.
- Online Forums. In addition to review sites, check out online forums where customers post their opinions and engage in online conversations with others about their experiences with various companies, including lenders. You can even post your own query if you have a specific question that you’d like answered.
For the most accurate results, consider using all resources mentioned.
Legitimate Lenders In Canada
Filters
- Amount
- Up to $35,000
- Rate
- 9.99% – 34.95%
- Term
- 9 – 78 Months
- Amount
- Up to $60,000†
- Rate
- 19.99% – 34.99%*
- Term
- 6 – 120 months
- Amount
- $500 – $10,000
- Rate
- Up to 34.99%
- Term
- Up to 60 months
How To Tell If A Loan Company Is NOT Legitimate?
There are many scammers in the alternative lending industry who pose as lenders. These scammer’s goal is to steal money and personal information from you. With enough sensitive information from you, certain scammers can steal your identity and use it for numerous criminal acts.
Here are some telltale signs that your lender is a scammer.
Be Wary If A Deal Is Too Good To Be True
We all want the best deal when it comes to getting a loan, but we also need to be realistic. If a loan company is promising you an outstanding deal, better than everywhere else, you should be wary. If you have to ask the question “is this too good to be true?”, it probably is. You should trust your instincts and go elsewhere. If a company can actually offer deals as good as they say they can, you would likely have heard about the deals and the company would have some press.
Watch Out For Upfront Fees
This is one of the clearest and easiest ways to tell if a loan company is illegitimate. A legitimate loan company will never ask you to provide a payment or pay a fee before you actually receive your loan, so if they ask you to do so, you should cease communication with them. No upfront payment will ever guarantee you get a loan, so don’t fall for that either.
No Lender License
Lenders should be licensed to work in their respective provinces or territory. If you can’t find a lender’s license number on their website or they’re unwilling to provide that information upon request, look elsewhere.
Puts Too Much Pressure on You
Taking out a loan is a major commitment, so you want to make sure you’ve taken the time to consider all factors before taking out a loan. Lenders should not make you feel as though you need to act immediately for any reason.
For instance, lenders who put pressure on customers to take advantage of today’s low rates before they disappear should be avoided. While loan rates are affected by current market conditions, the rate you ultimately get will be based on your credit score and financial health.
No Underwriting Process
Legitimate lenders go through a specific process to make sure you are financially qualified to carry a loan and manage it responsibly. This involves conducting a credit check on you to verify your creditworthiness or a background check to assess your finances. Be wary of lenders who guarantee loan approval without any sort of check on you, as this will only put you in a financial position that you may find difficult to get out of.
Are Pre-Approvals Legitimate?
Loan pre-approval requires that the lender evaluate your personal and financial information to verify your identity and assess your income and employment. They may also conduct a credit check to verify your creditworthiness.
Getting pre-approved is recommended, as it will give you an idea of what you can get approved for based on your credit and financial profile. But pre-approval is not a promise of loan approval, but merely an estimate.
Having said that, a legitimate lender won’t make you an offer for a pre-approved loan without doing any background check on you. But if they do, they’ll inform you that the offer is not guaranteed and that your personal and financial information will first need to be checked before an actual pre-approval is provided. Any lender that promises to pre-approve you for a loan without having conducted any checks on you is a potential sign of a predatory lender.
Take The Loan Agreement To A Lawyer Or Other Professional
Before you agree to sign anything, you should have a lawyer look over the contents of the agreement. If the loan company objects to this, that is a huge red flag. Going with a lawyer is always a good idea as they might be able to catch things that you may have missed. Once they give you the go ahead, you should feel good knowing that you have done all you could to prevent yourself from getting scammed. However, there are never any guarantees as scammers are sadly getting better and better at making their operations look legit.
Additional Reading
Bottom Line
Ultimately, you need to trust your gut and judgment when it comes to things like this. However, you can use the information above to help you find out if a loan company is legitimate, or if they are just trying to scam people.
If you have been scammed, it is a good idea to report it to your local law enforcement right away. While there is a chance you won’t get your money back, hopefully by reporting it, the authorities will be able to locate and shut down the individual or company that is tricking people with loan scams.
How To Check If A Company Is Legitimate In Canada FAQs
How do you find out if a loan was taken out in your name?
Are online loans legit?
Do I need to provide my SIN for a loan?
Is it okay to provide my banking information to a lender?
®Fairstone Financial Inc. is a wholly owned subsidiary of Fairstone Bank of Canada.
*Interest rates are subject to change. Actual Annual Percentage Rate (APR) varies based on the province of residence and individual factors like credit details and loan amount. The interest rate on an unsecured personal loan is 31.99% in BC.
†On approved credit. Terms and conditions apply. Interest rates vary by province/territory and from customer to customer based on factors like credit score and borrowing history. See Fairstone’s website for details.
Fairstone Financial Inc. holds high-cost credit licenses in AB, MB (License #85047, expiring 20-02-2026) and QC; it has applied for a high-cost credit grantor license in NL. For license information by province, visit Fairstone.ca/HCCG
In Ontario, Fairstone Financial Inc. is licensed as mortgage brokerage 10821.
In Nova Scotia, Fairstone Financial Inc. is licensed as mortgage lender #2021-3000028.
