How to assess a tailored loan offer

A tailored loan offer should be judged by its terms. What amount would you receive? What would each payment cost? When would the balance be repaid? The word personalized does not answer any of those questions.

This guide helps you examine a specific offer after comparing credit options. If you are still choosing between a loan, line of credit and other household borrowing, start with how to compare household credit options.

Find out what is tailored

Ask the lender to identify the feature it has adapted to you. It might be an amount or payment frequency, but do not assume an advertised benefit is available in your contract. Read what the offer actually says and ask about any difference from the advertisement.

Check the amount against the expense you intend to cover. An offer for more than you need creates a larger repayment commitment. An offer that falls short still leaves part of the expense to fund. Neither result should be accepted simply because an offer is available.

Read the cost as a whole

• Find the amount you will receive and any amount deducted before payment.
• Read the interest rate and all required charges.
• Check recurring fees and how long they apply.
• Record the number and amount of payments, including any different final payment.
• Find the total cost of borrowing and total amount repayable.

If two figures do not seem to agree, ask the lender to walk you through the calculation. Keep the written explanation with the offer. A smaller payment may result from spreading repayment over more time rather than reducing the cost.

The Quebec consumer protection office's advice before borrowing is a useful source when reviewing a money-loan contract.

Test the dates against your budget

Put the proposed payments on your calendar alongside expected deposits and essential bills. Look for dates when several withdrawals fall close together. If your income varies, use an ordinary lower-income period as well as your current estimate.

Read the terms about late payments and early repayment. If a payment date would be difficult, ask whether an alternative is available before signing. An adjustment requires the lender's agreement; a request alone does not change the offer.

What NovaCash publishes

NovaCash advertises a fast online loan from $300 to $2,000 CAD. It lists weekly, every-two-weeks or monthly payment frequencies and early repayment without penalty. Its published FAQ also states that monthly membership fees apply during the loan. Check their amount and treatment in the offer.

The home-page calculator illustrates six months and excludes membership fees. The offered repayment schedule governs; do not treat the illustration as a promised term or assume the full loan is due next payday.

Before applying, read the eligibility criteria. These include employment for more than three months and at least $1,200 a month by direct deposit, along with other requirements. Self-employment and income from social assistance, child tax credits, student loans and retirement savings are excluded. A tailored description does not change those conditions.

Choose whether to accept

You can take time to understand an offer and decline terms that do not work for you. Ask for clarification at (877) 431-4134 for a NovaCash offer. Compare the final written terms with your budget once more before accepting, and keep a copy for checking future payments.