Online payday loans have made short-term borrowing available without requiring consumers to visit a physical storefront. A borrower can often complete an application from a computer or mobile device and communicate with the lender electronically. However, the convenience of applying online does not eliminate the need to check the lender, understand the agreement and protect personal information.

Ontario’s payday-loan rules apply to licensed payday lenders, including businesses that provide payday loans remotely. Lenders must comply with requirements under the Payday Loans Act, 2008 and related regulations.

Before submitting an online application, consumers should determine who they are actually dealing with. Ontario advises borrowers to verify that a payday lender is licensed. This is particularly important online because some websites may be lead generators. A lead generator may collect information from people looking for loans and then provide or sell that information to an actual lender.

Consumers should be cautious about providing sensitive information until they understand the company’s identity and role. An online loan application may request information such as employment details, banking information and identification. Before providing these details, borrowers should review the company’s information and confirm that they are dealing with an appropriately licensed business.

The loan agreement itself is another important consideration. Ontario requires payday-loan agreements to contain specific information, including the amount borrowed, cost information and information about the borrower’s rights. For remote payday loans, additional rules can apply regarding when the loan and agreement must be provided.

Online borrowers should also understand Ontario’s cancellation rules. Generally, a payday-loan agreement can be cancelled within two business days without a reason or penalty, provided the applicable requirements are met. For remote agreements, Ontario regulations specify circumstances and procedures that apply to cancellation.

The cost of the loan should be considered before the application is submitted. Ontario currently limits the cost of borrowing to $14 per $100 borrowed. The lender must also provide information about the cost of borrowing and the applicable repayment terms.

Consumers should be particularly careful with websites promising guaranteed approval, unusually large loans or unusually low costs. Such claims do not necessarily indicate that a company is legitimate or that the loan is appropriate for the borrower’s circumstances.

A secure website and professional-looking application are not substitutes for checking a lender’s credentials and reading the agreement. Borrowers should understand the amount they are receiving, the amount they must repay, when repayment is due and what happens if the payment cannot be made.

Online payday loans can be convenient, but convenience should not replace due diligence. Checking the lender’s Ontario licence, reviewing the complete agreement, protecting personal information and calculating the total repayment amount are important steps before accepting an online payday loan.