4.1. Demographics. Many borrowers within our sample were of working age.
Figure 1: Respondent generation
|Respondent age group||%|
As shown in Figure 1, 72 % of participants had been between 25 and 54 years old. Eighty-three per cent lived in a area that is urban and 55 per cent rented their house (while 32 per cent owned a property with home financing and nine per cent owned one without home financing. )
More participants had incomes that are low-to-moderate.
Figure 2: Domestic earnings
|lower than $32K||28|
As shown in Figure 2, over 50 per cent lived in households with yearly incomes under $55,000, and over 70 per cent lived in households with incomes under $80,000. But, 20 per cent reported home incomes surpassing $80,000, with seven per cent over $120,000, demonstrating that cash advance use is certainly not limited to low-income Canadians. Footnote 11
This demographic information will assist FCAC to tailor academic resources.
4.2. Understanding expenses
Pay day loans are a high priced method to borrow funds. As shown in Figure 3 Footnote 12, they have been far more high priced than many other credit that is short-term.
Figure 3: cash advance price vs. Alternative methods of borrowing (predicated on a $300 loan taken for two weeks)
|Borrowing from personal credit line||Overdraft security on a banking account||advance loan on credit cards||pay day loan|
Not surprisingly, less than 50 % of participants comprehended that a payday loan is more costly than a superb stability or cash loan on a charge card (see Figure 4). This means that that almost all respondents are not conscious of the general expenses of all of the short-term credit choices and will be utilizing pay day loans more frequently because of this.
This shows the requirement to increase customer understanding concerning the general expenses of numerous credit services and products.
Figure 4: nearly all participants would not precisely see that payday advances cost significantly more than an outstanding stability or cash loan on credit cards.
4.3. Size of loans
Many payday advances taken down by participants had been reasonably little in value.
As shown in Figure 5, three-quarters reported loans of $1,000 or less, while over fifty percent (55 per cent) reported loans of $500 or less. Twenty % reported loans of $500-$1,000, while just four percent reported loans of $1,001-$1,500.
Figure 5: Can you calculate that total value of this final cash advance you took?
|$1 – $500||55|
|$501 – $1000||20|
|$1001 – $1500||4|
|$1501 or higher||7|
|choose to not ever respond to||14|
In Canada, a regulated cash advance cannot go beyond $1,500, yet seven per cent stated the worthiness of these loan had been over $1,500. It really is not clear whether these respondents had been citing the sum total price of borrowing (including interest and charges), had been thinking about another kind of borrowing, or had the ability to access larger payday-style loans off their loan providers. Almost 50 % of people who accessed loans over $1,500 accessed their loans online, which might suggest that bigger loans are now being accessed that way.
4.4. Repayment of loans
While payday loans are created to bridge customers with their paycheque that is next utilized sources except that their paycheque to settle their final loan.
Some respondents reported looking at cost savings reports, taking out fully new payday advances from another loan provider, borrowing from buddies or household, or using banking account overdrafts to settle their outstanding pay day loans (see Figure 6 Footnote 13 ). Just exactly exactly What stays not clear is excatly why they didn’t access these resources of funds previously—instead of taking right out loans that are payday. This might be another indicator that borrowers try not to completely understand that payday loans cost a lot more than other credit choices and underlines the necessity for associated customer training resources.
Figure 6: How have you typically reimbursed the quantity owed for the payday loan(s)? (pick all of that apply)
|Accessed cash through credit line||2|
|lent from the bank or credit union||2|
|decided to go to pawnbroker||2|
|Accessed money through charge card||3|
|have never yet paid down my loan(s)||4|
|Cashed in RRSP or other assets||4|
|utilized overdraft on a banking account||5|
|Borrowed from buddies or family||7|
|Took out a unique payday loan(s)||7|
|Took out cash from a savings account||13|
|applied my paycheque||70|
4.5. Known reasons for loans
Many participants reported taking out fully pay day loans to cover necessary costs.
As shown in Figure 7, very nearly half participants (45 %) said they typically utilized loans that are payday unforeseen necessary expenses, such as for instance vehicle repairs. Almost as much (41 %) said they typically utilized payday advances for recurring and therefore expected necessary costs, such as for example lease or bills. Footnote 14