Loans Canada Study Suggests Lender Bias May Affect Borrowing Experience: Here Are 5 Tips To Protect Yourself
TORONTO, Aug. 9, 2021 /CNW/ - In a recent study conducted by Loans Canada, the country's leading loan comparison website, 3480 credit-constrained Canadians were asked about their experiences with borrowing online. The results of the survey highlight specific challenges that Indigenous groups and other marginalized groups as a whole should be beware of.
Key Findings:
- Of the respondents with very poor health:
- 51.7% reported being pressured to complete their loan application quickly, while only 37.1% of those with very good health reported the same.
- 43.6% reported being charged fees that were different than explained, while only 32.5% of those with very good health reported the same.
- 51.7% reported being pressured to accept credit building services, while only 41% of those with very good health reported the same.
- Of the Indigenous men:
- 53.9% felt pressured to complete their loan applications quickly, while only 41.8% of the rest of the men reported the same.
- 47.7% were rejected because their lender needed additional documents that they could not provide, while only 38.6% of the rest of the men shared the same experience.
- Of the Indigenous women:
- 43.4% were rejected because their lender needed additional documents that they could not provide, while only 34.6% of the rest of the women shared the same experience.
- 47.6% felt pressured to accept credit building services, which is 8.7% more than the rest of the women (38.9%).
- 39.8% of the indigenous women and 30.6% of the rest of the women were charged fees that were different than explained by their lender.
- 27.6% were paying for loan protection insurance but did not know what it was or did not know they were paying for it. That's 5.5% more than the rest of the women (22.1%).
To see the rest of the study, visit this page, Alternative Lending Study: The Borrowing Experience.
Five Recommendations For Marginalized Groups Borrowing From Online Lenders
1. Watch Out For Loan Protection Insurance
Consumers should watch out for a loan insurance clause added to their loan contract. Some lenders may try to convince an applicant that it is a mandatory requirement when typically it is not. Adding loan insurance will make monthly payments more expensive and the loan less affordable overall.
2. Read The Loan Contract And Pay Attention to Fees
Before signing a loan agreement, there are certain details consumers should review first. By law, lenders are required to disclose the terms of a loan, including any fees. The extra time you take to review these small details will save you future headaches from lenders who may charge fees that are different from what is on the contract.
3. Don't Get Rushed
A lender should never pressure a borrower into completing an application quickly or accepting a loan offer. It is important for all consumers, regardless of where they are from or who they are, to receive adequate time to make an informed decision. Avoid borrowing from lenders who use pressure tactics.
4. Beware Of Opt-Out Add Ons
Watch out for unneeded products and services. One particular example that consumers should beware of is a credit building service. Oftentimes these are offered on an "opt-out" basis only and consumers are unaware they are signing up for them. This is another reason why it's so important to read a loan contract before signing.
5. Have Your Documents Ready
Incomplete applications and missing documents are common reasons for rejection.
When applying for a loan be sure to complete your application to the best of your abilities and be prepared to submit additional documents or information.
About Loans Canada
Launched in 2012, Loans Canada is the country's leading loan search and comparison platform. Millions of Canadians visit Loans Canada each year to compare lenders, find useful personal finance advice, or to search for credit products. Loans Canada's proprietary lender-matching technology instantly connects borrowers to lenders and other financial solution providers. For more information, please visit www.loanscanada.ca.
Survey Methodology
From March 16, 2021, to April 19, 2021, a survey was conducted by Loans Canada. A convenience sample of 3480 Canadians who have applied for loans online were asked questions related to their borrowing experience. Participants were asked 24 questions and data was collected using Google Forms.
SOURCE Loans Canada
Scott Satov, 877-995-6269 x701, [email protected]
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