The Circle K store on Parliament St. in Toronto’s Cabbagetown neighbourhood,on May 21, 2020.Fred Lum/The Globe and Mail
Circle K customers can now apply for personal loans at select locations in Ontario, the latest in what experts say is a growing effort by online lenders to make borrowing as convenient as possible.
The loans are provided by Canadian fintech company iFinance, part of the Iceberg Finance Group, and currently available at several Circle K stores in Ontario. Customers can scan a QR code to access a digital-only application for loans of $750 to $3,000 with interest rates starting at 9.99 per cent.
“Circle K is known for convenience, and that aligns perfectly with how people access financing through iFinance,” said Bojana Ceranic, a spokesperson for iFinance, in an e-mailed statement.
“It’s about visibility in the right places and offering clients a faster, more flexible alternative to traditional banks.”
Chris Barnes, a spokesperson for Alimentation Couche-Tard Inc. ATD-T, which owns the Circle K brand, said the partnership with iFinance reflects the company’s commitment to providing easy, convenient access to products and services, including financial services. The loans add to the suite of financial services Circle K stores were already providing in Canada, such as ATMs and gift cards, the company said.
Couche-Tard and iFinance declined to provide additional details about the structure of the arrangement, including whether it involves revenue sharing.
The move to provide credit at corner stones is in line with ongoing efforts by fintech lenders in both Canada and the U.S. to make loan applications as accessible and fast as possible, said Hans Frech La Rosa, a behavioural researcher at Duke University’s Common Cents Lab.
The ability to get a loan without having to gather physical documents or take time for an in-person visit to the bank can be a benefit to some consumers, Mr. Frech La Rosa said. But it can also land some borrowers into trouble, providing an additional way to accumulate debt for discretionary spending, he added.
IFinance, which also offers financing for dental, medical and veterinary procedures, among other types of loans, first announced it had partnered with some Circle K stores in Ontario in February.
At a Toronto Circle K location recently visited by The Globe and Mail, window stickers on the inside and outside of the store advertised the iFinance loans and displayed a QR code to apply for them.
Clicking the link generated by the code leads to a user-friendly platform that prompts customers to provide information such as personal details, income and employment status.
When consumers complete the online form, iFinance performs what’s known as a soft credit check, which doesn’t affect an applicant’s credit score, the company said. To finalize the loan, the platform asks applicants who are preapproved to provide their consent for a hard credit check, a standard step in loan applications that can appear on a borrower’s credit report and therefore affect their credit score. Users can then review the loan terms before signing up digitally.
“The entire process typically takes under 10 minutes,” Ms. Ceranic said, adding that iFinance has bilingual agents available seven days a week who can assist applicants.
The loans aren’t payday loans, which allow Canadians to borrow small amounts for a short period of time at prohibitively steep fees. Instead, the iFinance loans offered at Circle K locations have terms of one to five years and are repayable at any time without fees or penalties, Ms. Ceranic said. Interest rates and the total cost of the loan are clearly disclosed during the application process and before the contract is signed, she added.
(The stickers in the store visited by The Globe advertised repayment periods of as much as six years, a loan term that reflects an earlier stage of the pilot and is no longer on offer, Ms. Ceranic said.)
But repaying small amounts of money over a year or more results in tiny monthly instalments, something that can make it harder for some borrowers to appreciate the cumulative amount of interest they’ve been paying, Mr. Frech La Rosa said.
And customers signing up for credit at Circle K stores can also have more than one iFinance loan open at the same time. While they must qualify for any additional funding based on their ongoing financial commitments, they are not required to have repaid a certain portion of a previous loan to access another one, according to Ms. Ceranic.
“If they meet our credit criteria, we’re happy to support their needs with a new loan,” she said.
