Mogo: Hipster Financial Service Or Debt Trap Provider?

April 16, 2020
Blog
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At Yore Oyster, we strive to help you make wise financial decisions. We're committed to giving you the most relevant, actionable advice anywhere.

Mogo is an online financial service provider. It provides loans, mortgages, and free credit card checks. They have great loans and mortgages, but also have high interest loans that could lead to a debt trap. They also offer really a fast service which makes them appealing to a large chunk of Canadians.

While they’re a perfectly legitimate service, there are some concerns around this company which we’ll talk about. In this article, we’ll go over Mogo’s pros, cons, benefits, and alternatives. By the end of it, you’ll know everything you need to make an informed decision.

What Exactly Is Mogo?

In the shortest way possible to describe it: Mogo is a fintech company that provides loans.

It does other things too, but this is its main purpose. Mogo offers people a way to get quick loans easy. It was founded back in 2003 and has been expanding ever since.

Mogo stands out from other lenders by focusing its efforts on attracting millennials. This company has marketed itself extensively as the go-to company for young people who need loans or mortgages.

If you’re over the age of 35, this company most likely isn’t for you. It’s mainly aimed at people getting started with their financial lives. Mogo uses phrases like “money up” to form its brand image and gives the sense that it’s a revolutionary app to help out with personal finance.

Whether it’s really revolutionary or not is what we’re going to discuss in this article.

We recommend Mogo if:
  • You’re well versed in personal finance and think you can get a good interest rate.

  • We don’t recommend it if:
  • You have a low credit score and can’t get a loan from other sources.
  • You’re looking for quick cash but aren’t certain if you can repay the loan in time.

  • How Can You Get Mogo?

    Opening a Mogo account is super easy. Just head on over to their website, Mogo.ca, and start filling in your details.

    They’ll ask you for some basic personal details like your name and date of birth. Along with that, they’ll also ask for your housing details, such as your mortgage payment, your employment information and the amount of money you intend to borrow from Mogo.

    Their app is available for Android, iOS and computer browsers.

    Location Matters

    To get Mogo’s services, you’ll have to be a resident of one of the following provinces: Saskatchewan, Newfoundland & Labrador, New Brunswick, Prince Edward Island, Nova Scotia, Ontario, British Columbia, Alberta, or Manitoba.

    Sadly, Mogo is not available for residents of Quebec.

    What You Need

    • A bank statement to show you have an account.
    • A minimum earning or $13,000 a year
    • A steady source of income for at least the previous month.

    Is Mogo Legit?

    yoreoyster mogo logo

    In short, yes.

    Legally speaking, Mogo is a perfectly legitimate company and is on the Toronto Stock Exchange. However, they do have hidden fees and extremely high Annual Percentage Rates (APRs) that could potentially hurl people towards a debt trap. Some of their fees are hidden, which makes them look shady.

    Personally, I wouldn’t go near them.

    What Services Does Mogo Provide?

    Free Credit Score Checks

    Aside from loans, Mogo gives you updates on your credit score every month. That’s quite valuable, and it’s certainly been a great customer magnet for this company. Mogo works with Equifax only, so if you use TransUnion, you won’t be able to pull your data from there.

    Keeping track of your credit score can be great for determining where you stand financially. However, you should take it with a grain of salt as there are different types of credit scores. Not every lender uses the same system for these, so results can vary.

    If you want to take out a loan, you should be wary of using the credit score from Mogo (or any other free source), because it may not match your actual credit score when you go ask a lender.

    Instead, simply use it as a tool to see if your score is going up or down, which is a good indicator of how you’re doing financially. Furthermore, Mogo alerts you of any possible fraudulent activities if there are suspicious changes in your credit score via their MogoProtect service.

    Mogo Mortgage

    yoreoyster mogo mortgage

    You can find a good mortgages list on Mogo’s website. The rates are quite acceptable as long as you have a decent credit score. We recommend one upward of 700.

    You’ll also be required to make a down payment, but for the most part, it’s possible to get the right mortgage for you. Mogo offers preapproved mortgages in your email, which can be pretty handy and time-saving.

    Personal Loans

    Mogo Zip (Small Loans For Low Credit Scores)

    This is perhaps one of Mogo’s most controversial and yet, alluring features.

    Mogo Zip offers loans up to $1,500. There’s no minimum credit score to attain this loan, but the APR is sky-high. You could be looking at a rate of 250% or even more.

    Loans like these might seem like a quick win, but they can often become troublesome and leave you trapped in debt. Tread carefully around those.

    Mogo Mini

    APR47.4%
    Amount$1,000 – $3,500
    DurationUp to 5 years

    Mogo Mini has an APR of 47.4%, which is much higher than anything that most credit cards provide. You’d be better off with a loan from elsewhere if you can manage.

    Mogo Liquid

    APR5.9% – 45.9%
    Amount$5,000 to $35,000
    DurationUp to 5 years

    Mogo Liquid is what Mogo displays on its website as the solution to all your problems. They state that credit card APRs are too high and that getting a Mogo Liquid loan could save you tons of money.

    If you can get a loan at better rates than your credit card, then, by all means, go for it! However, it’s unlikely that you’ll get such rates. You’ll need an extremely high credit score to pull that off. However, if you get a great APR it would definitely be worth the trouble.

    Related: Looking for credit cards with low interest rates? You might find these ones beneficial.

    Where Mogo Is Clearly A Winner

    A Clean Interface

    We’re huge fans of the classy website and apps that Mogo has developed for its userbase. From their sign-up process to their loan approvals, everything is pretty straightforward. You won’t find yourself confused with any ambiguous steps or broken links.

    Of course, that’s to be expected from a company that caters to a generation used to technology in every walk of life. Their interface looks professional and is easy to use.

    Extremely Fast Approvals

    Mogo likes to go fast. Don’t be surprised if they approve your loan the very day that you apply for it. To be sure, that’s some serious efficiency right there! While loans from banks might take some time, there’s also the added fear of being rejected by them. Mogo sidesteps these issues completely, which is clearly a point in their favour.

    No Fees For Early Payment

    There are plenty of loans out there that would have you pay a fee if you want to pay off your loan earlier than planned. With Mogo, if you pay off your loan earlier than scheduled, there won’t be any negative consequences. Credit where credit is due, this a nice benefit that lets you have more flexibility when paying.

    Mogo’s Downsides

    Difficult To Get Your Hands On Customer Services

    While loan-approvals are fast, Mogo is rather difficult to contact after that. Their first line of customer service is automated with bots. This can be quicker in many instances, but it also means you won’t get proper help if you have any out-of-the-ordinary inquiries.

    You’ll have to wait for a pretty long time to get human help on the phone. Even then, you’re not guaranteed to get your issue solved.

    High Interest Rates In Some Cases

    The APR on some loans, especially Mogo Zip loans, can mean financial difficulty in the future if you’re not careful. Be sure that you can return your loans on time, otherwise, you’ll end up messing up your credit score. In the worst-case scenario, you could end up falling into a debt trap.

    Extra Loan Fees

    Fees that aren’t made clear unless you look hard for them could make your experience with Mogo a bad one. If your bank lacks the money to pay back your loan on time, you’ll receive an NSF (non-sufficient funds) fee of around $20 to $50. That’ll make it even harder to pay back your loan.

    Is Mogo A Payday Loan Lender?

    I’m not going to sugarcoat it; payday loans are for people who find themselves at the bottom of the barrel and out of options. They tend to have extremely high interest rates (we’re talking over 600% APR, or even more, which is nuts!).

    Getting a loan like this will probably hurt your financial future. If you miss a payment, you’ll soon find yourself getting more loans to pay back previous loans. Then this cycle becomes never-ending.

    Luckily, Mogo is not a payday loan lender. They have similar tactics and their Mogo Zip loans have high APRs. But, their fees and interest rates are way lower than payday loans, making this company a much better option for people who find themselves helpless.

    Getting a high APR loan from Mogo isn’t recommended, but if all your other options are exhausted, it’s better than predatory payday loans.

    Alternative Services That Might Help

    yoreoyster mogo

    Credit Karma

    If you’re opening a Mogo account, we highly suggest Credit Karma. This company doesn’t ask for money. Not for a single one of their services.

    They stick by this and don’t even ask for your credit card number. You can simply sign up and view your credit reports and credit score for free, whenever you want.

    LoanConnect

    If you’re trying to get a quick loan, you might want to try out LoanConnect. Its purpose is to lead you to your perfect lender.

    There’s no minimum credit score to apply here, so go ahead and give it a try. Their soft inquiries won’t hurt your credit score.

    Credit Counselling Society

    If you’ve hit a hard spot financially, it doesn’t hurt to ask for help. The Credit Counselling Society offers guidance and support for people who find themselves going downhill.

    The way it works is simple, a professional will offer you free counselling after you apply. Other than that, this organization has multiple services like debt consolidation and debt settlements. If you’re facing overbearing debt, your lenders might consider shuffling things up to make repayment easier for you, and the Credit Counselling Society helps make that possible.

    It’s mostly free of cost, and you’re only charged for services when your debt is reduced. It’s pretty much worth it. Reaching out for help is much better than gambling with your financial life by taking another loan.

    Related: If you’re looking to improve your credit score, we recommend the Home Trust Secured Visa.

    One Last Bit Of Advice

    Your bills are due in two days while your salary is due in two weeks. You think that you can get a quick loan and then pay it back when you get your salary. That’ll save you from a lot of embarrassment. Right? Wrong.

    Talking to your billing company can actually be a great help, and in any case, you don’t lose anything by trying. It’s surprising how lenient most companies and banks can be if you just reach out. As long as you have a clean history, you should be in the clear. Simply ask them for some extra time, they’ll likely be happy to look the other way for once. After all, it’s in their best interest to keep a paying customer on their feet.

    Verdict – Should You Apply For Mogo?

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    It really depends on what you want from them.

    If you want to keep tabs on your credit score, there are better alternatives out there.

    If you have a low credit score and need quick cash, you should exhaust every other option before approaching a loan with a high APR. Even asking a friend is a better deal.

    However, if you’re smart about your finances, and can spot a better interest rate or mortgage than what you normally have, then go for it. Just be sure to read the fine print before you sign any papers (sounds obvious, but many people don’t bother).

    All in all, there isn’t anything overly special about Mogo. It seeks to appear as a trendy loan provider, but that’s just skin deep. In general, we don’t recommend Mogo for your financial needs.