Borrowell was founded in 2014 “to help people make great decisions about credit”. It’s been going from strength to strength ever since. Here is a quick review of Borrowell and what it has to offer.
What is Borrowell?
Borrowell is essentially a “fintech” company, rather than a financial institution. It provides financial education, tools for financial management, offers personal loans itself and works as a broker for various financial products.
Is Borrowell safe?
How does Borrowell work?
There are essentially three parts to Borrowell’s offering. The first is education, the second is financial tools and the third is financial products.
Borrowell and financial education
Even if you don’t want to sign up for a Borrowell account, it can still be well worth checking out their website. It’s full of useful information on all aspects of personal finance. Just reading it thoroughly can help you to improve your money-management skills.
One of the nice features of Borrowell’s financial education section is that it does respond to topical events if they have a potential financial impact. For example, it has provided extensive information about how COVID19 could impact on personal finances and has offered advice on what to do about it.
Borrowell itself only offers personal loans and the “Borrowell Boost” service, which is essentially a cross between insurance and a personal loan. It does, however, act as a broker for many other financial products. Currently, it has third-party offers on personal loans, mortgages, banking services, credit cards and insurance. Here is a quick overview of its product range.
Borrowell Credit Score
Assuming you’re logged in and signed up, you can check your Equifax credit score, literally at the click of a button.
You can then go on to get advice on how to improve your credit score and/or recommendations for products suitable for someone with your credit score.
Borrowell Credit Score - Key takeaways
These days, the ability to check your credit score is fairly common. In fact, it’s on the point of becoming standard. It’s also fairly common to be offered information as to how to improve it.
What makes Borrowell stand out is their use of an AI-powered assistant, “Molly”, to guide you through the process. It’s also commendable that they also provide a lot of information in “old-school” text form, to accommodate people who prefer a more traditional approach to financial education.
Another nice plus about Borrowell is that they can point users in the direction of products that are likely to be available to someone with their credit score. This can save both unnecessary searches on your credit file and unnecessary disappointment.
It is, however, worth noting that your Equifax credit score only acts as a guide to how the other credit bureaus will see you. It is therefore still advisable to get your other credit records from time to time and check if there is any cause for concern. Mistakes are rare but they can happen and when they do it’s important to have them corrected as quickly as possible.
Borrowell simplifies the loan-application process down to four easy steps.
The minimum loan amount is $1,000 and the maximum is $35,000. You can increase (or decrease) the amount in increments of $100. For Borrowell’s own personal loans, the terms are 3 years or 5 years. There are no other options. You can, however, choose the day of the month on which your repayment will be taken.
Borrowell only issues loans to a single applicant (so no joint loans). As of October 2020, applicants need a minimum pre-tax income of $20,000, 12 months of credit history and a minimum credit score of 660. It usually takes 1-2 business days to get an approval, however, it may take 3-4 if Borrowell needs to verify your bank.
When you receive your offer, you have 14 days to accept it. If you do not actively accept it, it will expire, although you can apply again. Once you have accepted a loan, you must repay it in full before you can apply for another Borrowell loan and you cannot top it up. You can, however, make overpayments and/or pay off the loan in full at any time without incurring a penalty.
Borrowell Loans - Key takeaways
Borrowell’s loan categories are slightly misleading. The “ Business Loan” option doesn’t actually take you to business loans. It takes you to personal loans that you can use for small business expenses. This difference matters because it means the loan will be based on your personal credit score, not your business’ credit score.
Setting this aside, however, the loan-application process is about as straightforward as it can be. The results are displayed in a way that makes it easy to compare and contrast your options. They may include loans from Borrowell itself and/or loans from several other providers.
In terms of the actual deals on offer, Borrowell can offer excellent rates. Realistically, however, so can lots of other places, especially credit unions. This means that any loan offers you get from Borrowell are likely to be much, if not exactly, the same as you would get elsewhere, admittedly if you knew where to look.
This means that, realistically, the main benefit of using Borrowell is essentially the convenience it offers. It may find you deals you would otherwise have overlooked or stop you from applying for deals for which you would not have been accepted. Even if it doesn’t, it streamlines and simplifies the application process.
The Borrowell Boost program is a cross between insurance and a personal loan. You pay a monthly fee, currently $4.99+tax. Borrowell then monitors your checking account, forecasts your bills and alerts you to when you might be short of cash to pay a bill.
If necessary, it can provide a “boost” of $75 to tide you over. This is interest-free and available regardless of your credit score. You can only have one boost at a time and you are expected to repay it within 15 days. Overall, however, you can have as many boosts as you need for as long as you subscribe to the program.
Borrowell Boost - Key takeaways
The logic behind Borrowell boost is that making bill payments in full and on time plays a major role in keeping your credit score healthy. Borrowell boost not only reminds you when payments are coming due but can also top up your finances to help you pay them. This stops short-term cash-flow problems from having a long-term impact on your credit score.
While all this may be true, it’s questionable just how much help this is in the real world. Borrowell’s algorithm basically just monitors regular payments. This means that you could achieve the same result, for free, just by setting reminders on your phone. As a bonus, this means that changes would take effect immediately rather than having to be picked up by Borrowell.
The option of an interest-free cash boost may be nice. It does, however, need to be repaid within 15 days. This may not be very helpful for people who get paid monthly and run into trouble at the start of the month.
With all that said, Borrowell boost may be a handy option for some people, especially young adults learning to budget and the newly self-employed. It should, however, probably be seen as a short-term workaround. The long-term solution would be to learn to monitor your bills and to have an emergency fund in place to deal with short-term cash-flow issues.
The process for applying for a mortgage through Borrowell is very similar to the application process for personal loans. There are, however, a couple of important differences. Firstly, Borrowell itself does not (currently) issue mortgages, so all offers are through third-parties. Secondly, Borrowell provides human “mortgage experts” to guide you through the process.
Borrowell Credit Card
Borrowell has a tool to help you work out the best credit card offers for you based on your credit score and your intended usage. It is partnered with several financial institutions including the major banks and American Express itself.
Borrowell can recommend both checking and savings accounts. Once you have your choice of account(s), Borrowell can monitor your credit score and give tips on how to improve it.
Having the right insurance cover is important for your peace of mind and for protecting your finances against unexpected shocks. Borrowell can make recommendations based on your needs, wants and credit score. It works with a wide range of insurance companies in Canada.
What are Borrowell’s Fees?
For personal loans, Borrowell charges an origination fee of 1-5% of the amount of your loan. This is added to the loan amount and retained by Borrowell before sending you your funds.
There are no other charges to borrowers unless you have insufficient funds for a payment. These are charged at a hefty $25 to $54 plus there may be an additional $28 fee for the collection company.
The Borrowell Boost service is currently charged at $4.99+tax per month.
For other products, Borrowell itself does not charge fees to the user as long as they make repayments on time. There is a strong chance that they will take a commission for referring you to their partner, but this is standard practice with affiliate programs.
What are Borrowell’s Interest Rates?
For personal loans, Borrowell’s interest rates start at 5.6% APR. This rate is, however, only likely to be offered to people with especially high credit scores. Borrowell cites an average APR of 11-12%.
Advances under the Borrowell Boost program are interest-free.
For third-party products, the interest rates will be determined by the partner organization. Realistically, the interest rates offered to you are likely to depend on your credit score (and the nature of the product). That said, Borrowell may be able to find you the most competitive deals available to someone with your credit score.
How to Sign Up for Borrowell (Step-by-Step)
A basic user account will, however, only get you access to the same sort of features you could have used when browsing as a guest. Even using their free credit score monitoring service requires you to input more personal details.
If you want to apply for any of the other financial products available on their site, then you’ll need to enter the usual level of detail. This includes the relevant documentation. For example, for personal loans you’ll need to have documented proof of legal income. For mortgages, you’ll need to have the usual legal paperwork.
There are, however, a couple of plus points to using Borrowell to coordinate your finances.
Firstly, it can save you having to re-enter basic data (like your name and address) every time you apply for a financial product. Secondly, the fact that it knows your credit score means that it will only ever suggest products for which you have a decent chance of qualifying.
Pros & Cons of Borrowell
Pros of Borrowell
Borrowell puts everything in one place. You can learn about managing your finances, access useful financial tools and choose key products all from one, single location. What’s more, you can do it on your phone or tablet just as well as you can from your desktop.
The fact that Borrowell is, essentially, built around your credit score, can make your life a lot easier. It takes a lot of the guesswork out of applying for financial products. Borrowell will know what their minimum thresholds are in terms of length of credit history and credit score. This means that it can keep its recommendations to products for which you are likely to qualify.
This approach not only saves time and potential frustration, but it can also help to keep your personal data safe. In simple terms, every time you hand over your personal data to a third party, you are putting it at risk, even if only to a small degree. Using Borrowell as an intermediary reduces the number of applications you need to make and hence lowers this risk.
Cons of Borrowell
Borrowell doesn’t really have any cons as such. There are, however, a couple of ways it could improve its service. Firstly, it charges hefty fees for payments which are declined due to insufficient funds.
To be fair, this is far from unusual for the industry. Also to be fair, some of these fees will be out of its control. For example, third parties may charge fees that are passed on. Borrowell does, however, presumably, have control over the fees charged for declined payments on its own loans and these can be very high.
It’s understandable that Borrowell wants to use a “carrot and stick” approach to making sure that people make their repayments in full and on time. The fact that it offers the Borrowell Boost program does, however, show that they are well aware that some people at least have cash-flow issues. Hefty penalties for late payments will not help with these.
Secondly, Borrowell’s FAQ section is organized by category but is not searchable. Likewise, their site overall is well laid-out and easy to navigate, but not searchable. This is a fairly minor issue, but it can be annoying. In any case, it seems like a bit of an odd omission given the quality of the site in general.
Is there anything special about Borrowell?
It has to be said that there’s arguably nothing particularly innovative about Borrowell’s offering. The possible exception to this is the Borrowell Boost program. It is, however, debatable how many people really benefit from this and to what extent.
For the most part, the functionality available on Borrowell is available in other places as well, possibly for free. The advantage of using Borrowell, however, is that it’s all made available to you in one place. What’s more, it’s customized to you as Borrowell knows your credit score and hence knows which financial products are likely to be made available to you.
Who Should Use Borrowell?
Borrowell is likely to suit people who want to take control of their finances without having to spend too much time and effort to do so. With Borrowell you can just log in to the website or app and have everything you need in one place. You can use it for financial education, to help with basic financial decisions or to help you find the financial products you need.
Another nice point about Borrowell is that, even if the imagery and colours are not to your taste, both the website and app are very well designed. They’re easy to navigate on both desktop and mobile and pages load quickly. What’s more, the same information is presented in different ways to suit different types of users.
Who Shouldn’t Use Borrowell?
If you’re strongly committed to ethics and sustainability and live outside of Quebec, then you might want to look at Mogo in preference to Borrowell. For clarity, Borrowell is committed to both ethics and sustainability. It just doesn’t put them front and center in its products and services, the way Mogo does.
If you’re not a big fan of Borrowell’s look and feel then perhaps Credit Karma would be more to your taste. It doesn’t offer banking, insurance or the Borrowell Boost program, but that may not matter to you. Even if it does, you could always use Borrowell specifically for those and Credit Karma for everything else.
Borrowell’s Main Competitors
There are two Canadian fintechs that could be classed as competitors to Borrowell. These are Credit Karma and Mogo.
Borrowell vs Credit Karma
There are two main differences between Borrowell and Credit Karma. Firstly, Borrowell works with Equifax, whereas Credit Karma works with Transunion. Secondly, Borrowell offers a much wider range of products. Credit Karma offers credit score monitoring, credit cards, personal loans and insurance. Borrowell offers all of these plus banking, insurance and the Borrowell Boost program.
Even though they are both fairly young fintechs, Borrowell and Credit Karma have quite different brand images. Borrowell’s is quite youthful and fresh whereas Credit Karma’s is a bit more traditional. Both websites and apps are, however, easy to navigate.
Borrowell vs Mogo
Borrowell and Mogo both offer credit score monitoring through Equifax plus personal loans and mortgages. At that point, however, their product offerings diverge. Borrowell offers credit cards, banking, insurance and the Borrowell Boost program. Mogo offers identity fraud monitoring, a prepaid Visa card and a cryptocurrency exchange and wallet.
Another point of difference is that Borrowell, like Credit Karma, works throughout the whole of Canada, whereas Mogo is still working on getting authorization to work in Quebec.
Mogo’s website also has a fresh and youthful look and feel. It is, however, much brighter and more colourful than Borrowell’s. It also places much more emphasis on its social and environmental credentials
Maurice (Moe) Muise learned the ins-and-outs of government while an employee of the Government of Canada in Ottawa for 10 years. His current focus is helping small businesses in Ontario to identify and maximize government grants to grow their business.
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