Goeasy said it now expects the rate of charge-offs — when unpaid loans are deemed uncollectible — to have hit 12.9 per cent in 2025, up from 9.2 per cent the year before. Management predicts the rate could go into the “mid teens” this year.
LendCare offers point-of-sale financing, making it seamless to buy anythingfrom used vehicles to a pet’s veterinary care. This pitch helped Goeasy grow its loan book as Canadians were pinched by higher prices and rising unemployment.
But struggling borrowers can miss payments, and delinquencies, or past-due loans, hurt earnings; the more customers miss payments, the more money the lender must set aside in case it needs to write off the loans. Weakening profits can spook investors and drive down Goeasy’s share price.
The Star’s investigation found that LendCare pulled unexpected payments from past-due accounts and repeatedly restructured loans in desperate efforts to keep them in apparent good standing. The plan was detailed in internal records and court filings, and confirmed by one current and three former collections staff.
A short-seller’s report published in September alleged similar suppression strategies were employed within Goeasy at large.
At the time, Goeasy denied wrongdoing. “LendCare has never taken steps to suppress delinquency or charge-off rates,” spokesperson Holly Unruh said.
On Tuesday, Goeasy disclosed that it would be making a correction of previously reported delinquency results. The correction was triggered after management “recently identified” an issue with the historical reporting practice at LendCare.
LendCare’s historical reporting practice “resulted in certain customer payments being recorded as received while they were in fact in the process of being settled at month end, some of which were ultimately not collected, and also impacted the company’s reported delinquencies,” Goeasy said in a news release.
The company did not respond to the Star’s questions about the announcement.
GoEasy said in its press release that the $178-million LendCare charge off followed “exhausted” efforts to recover the subsidiary’s bad loans.
Goeasy announced the appointment of Farhan Ali Khan as the new head of LendCare — part of a six-step plan to “strengthen” Goeasy’s operations and financial performance. The plan also calls for reducing new LendCare loans for vehicles and other goods.
After the announcement, Goeasy’s share price plunged 57 per cent, as of market close Tuesday. Stock analyst John Aiken said he expects Goeasy will record a loss in the fourth quarter. If so, it would be the firm’s first quarterly hit since Q4 2010, according to FactSet data.
“With new management at the helm, it seems like they are going through a cleanup exercise to address shareholder concerns and dampened delinquencies to avoid major losses in the future,” Shalabh Garg, investment analyst at Veritas Investment Research, told the Star.
