If you’re planning on taking out a loan, working with legitimate lenders is the most important thing you can do. We’re going to tell you why and explain the risks of borrowing money from unlicensed lenders.
Take your time
Responsible borrowing can be a good thing, but sometimes loans can get you in trouble. Before you make a decision, take some time to weigh your options and explore what is out there. There are lots of factors to consider before you borrow money: Things to think about before you take out a loan.
Find out if your lender is legitimate
Regardless of what type of lender you work with, it’s important to make sure you’re borrowing money from a legitimate business. Verifying that you are dealing with a law-abiding and regulated business may be the most crucial step in your financial decisions.
Federal banks: If you’re borrowing money or taking out a loan from a federally regulated financial institution, such as a bank or trust, they must follow certain rules and operate within the laws set by the Financial Consumer Agency of Canada (FCAC). Search for a federally regulated bank or trust.
BC credit unions: Credit unions in BC are regulated by the BC Financial Services Authority. Search for a BC authorized credit union.
Payday lenders: A payday loan is a short-term loan with high fees that make it an expensive way to borrow money. We license and regulate payday lenders in BC. Find out if your payday lender is licensed with us.
The risks of borrowing money from unlicensed lenders
- If a lender is not licensed when they are required to be, they are already operating outside of the law – potentially like a scam or criminal enterprise
- There’s a chance your loan agreement is also not compliant with the rules and your annual percentage rate (APR) could be more than or equal to 35%, which is the legal maximum set by Canada’s Criminal Code
- If you don’t pay your debts on time, unlicensed lenders may follow illegal collection behaviour, such as sending non-stop threatening emails, repeatedly auto-dialing your place of work, and continuing to operate outside of the law
- Your options may be limited. If you need help or want to exercise your rights, it can be difficult to enforce the rules when a business is not licensed, has no real business address, and refuses to follow the law in the first place, leaving you with few options
Find out now: Check if your payday lender is licensed.
Where to go for help
Unlicensed lenders: If you are dealing with a business that is unlicensed and operating illegally, please report it to your local police. Be aware that it is often difficult to resolve issues when dealing with intentionally unlicensed lenders.
Banks and credit unions: If you have an issue with a federally regulated bank, you may be interested in contacting the Financial Consumer Agency of Canada. If you’re dealing with a BC authorized credit union, the BC Financial Services Authority may be able to assist you.
Licensed payday lenders and high-cost credit grantors: If you borrowed money from a licensed payday lender or licensed high-cost credit grantor and are having issues, please read through our resources on our website to learn about your rights when it comes to payday loans and high-cost credit products. If you believe the business is breaking the rules after reading through that information, you can submit a complaint to us directly.
About Consumer Protection BC
We’re a not-for-profit provincial regulator. The laws we oversee capture your rights when it comes to credit reporting, debt collection, payday loans, high-cost loans, and certain aspects of debt repayment services. Find out more about us and the other industries and transactions we oversee by exploring our website.
Learn more about your rights when it comes to debt and borrowing.
More debt and borrowing resources
Managing debt
How to make a plan to manage your debt
Comparing different debt relief options
The impact of debt on your credit report
How to improve your credit score
How to build healthy financial habits
Debt collection
How to stop collection calls
What to do if it’s not your debt
The rules debt collectors must follow in BC
How to dispute a debt
Borrowing wisely
Things to think about before you take out a loan
Understanding the cost of your loan
The rules for payday lenders in BC
The risks of borrowing money from unlicensed lenders
Buy now, pay later plans: what you need to know
Tell us what you think for a chance to win!
The information above is part of a consumer education initiative on debt and borrowing in BC and we want your input!
By completing the survey, you will be entered to win one of two $300 prizes and you’ll support consumer education in the province. Your feedback will help us fine-tune our educational resources so we can continually improve and help more people make informed debt choices in BC.
I’m broke be nice to have one help me out with my bills
Hi Henrietta, thank you for leaving us a comment here. If you are seeking help managing your debt, you may want to consider debt relief options. We have a lot of information on this topic on our website – please visit this page for more details. I hope this is helpful to you.