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Myth Busting Payday Loans: Online Loans vs Payday Loans

Man using computer in the dark

Sometimes life happens and your carefully crafted financial plan gets derailed by unexpected expenses. If you’re in a temporary tough spot, you may need some cash in a hurry. A quick internet search can show you a huge array of options – like an online loan. Online loans vs payday loans, same difference, right?

Is it true?

Myth: Online loans vs payday loans – they’re all the same.

Truth: In Ontario, in order to be a loan retailer, a company has to be licensed with the Government of Ontario and abide by the Payday Loans Act. Payday loan retailers, such as Pay2Day, follow those rules. Online loan offers often promise fast service but oftentimes work outside the law. They are usually scams.

So how can you know for sure which loan retailers are real and which are scams? There are a few ways to determine whether you are getting scammed or actually going to get a loan.

Red Flags to Watch For

  • Beware of e-mails pre-approving you for a loan you never requested. Unsolicited e-mails can lead to identity theft.
  • Scammers will not give a location or contact information. If this information is not readily given, be aware of what they are offering.
  • A lender who only asks for your bank account information is more than likely a scammer.
  • Lenders that contact you first are generally scammers. You should always be the one to reach out to the lender first.
  • Do not pay upfront in order to apply for a loan. Legit lenders will never ask for money before giving you the loan.
  • Bad spelling in e-mails generally means a scammer. Most scammers are from other countries and English is not their native tongue.
  • When you are asked to respond to an email through an email address other than the one in the header, you may be looking at a scam. If this is the case, don’t respond at all. Report the email to your ISP as a phishing attempt.

Final takeaway: it’s important to trust your instincts. If the offer sounds too good to be true, it probably is.  A small, personal loan through a legitimate payday loan retailer is great option when you’re temporarily short on cash. If you’re looking for a location in the Greater Toronto area, contact us.

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