September 8, 2020

4.1. Demographics. Most borrowers inside our sample were of working age.

4.1. Demographics. Most borrowers inside our sample were of working age.

Figure 1: Respondent age bracket

Respondent age group Percent
18-24 6
25-34 24
35-44 27
45-54 21
55-59 10
60-64 7
65+ 6

As shown in Figure 1, 72 % of participants had been between 25 and 54 years old. Eighty-three % lived within an area that is urban and 55 % rented their property (while 32 per cent owned a property with a home loan and nine per cent owned one without a home loan. )

More respondents had incomes that are low-to-moderate.

Figure 2: Domestic earnings

Home income %
lower than $32K 28
$32K –

As shown in Figure 2, over 50 percent lived in households with yearly incomes under $55,000, and over 70 per cent lived in households with incomes under $80,000. Nevertheless, 20 per cent reported home incomes surpassing $80,000, with seven % over $120,000, demonstrating that cash advance use is not on a low-income Canadians. Footnote 11

This demographic information will assist FCAC to tailor academic resources.

4.2. Understanding expenses

Payday advances can be a way that is expensive borrow funds. As shown in Figure 3 Footnote 12, they’re a lot more costly than many other short-term credit options.

Figure 3: pay day loan price vs. Alternative methods of borrowing (considering a $300 loan taken for two weeks)

Borrowing from personal credit line Overdraft security on a banking account cash loan on credit cards pay day loan
$5.81 $7.19 $7.42 $63.00

Regardless of this, less than 50 % of participants comprehended that a payday loan is higher priced than an outstanding stability or cash loan on a charge card (see Figure 4). This suggests that almost all participants are not aware of the general expenses of all of the credit that is short-term and can even be utilizing payday advances more regularly because of this.

This features the requirement to increase customer understanding in regards to the general costs of numerous credit items.

Figure 4: nearly all participants would not properly observe that payday advances cost significantly more than a balance that is outstanding cash loan on a charge card.

Response Percentage
Right 43
Wrong 57

4.3. Measurements of loans

Many pay day loans 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 %) reported loans of $500 or less. Twenty per cent reported loans of $500-$1,000, while just four per cent reported loans of $1,001-$1,500.

Figure 5: Could you estimate that total worth associated with payday that is last you took?

Believed value per cent
$1 – $500 55
$501 – $1000 20
$1001 – $1500 4
$1501 or even more 7
favor to not ever answer 14

In Canada, a payday that is regulated cannot go beyond $1,500, yet seven % said the worth of the loan had been over $1,500. It really is confusing whether these participants 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 bigger payday-style loans off their loan providers. Almost 1 / 2 of people who accessed loans over $1,500 accessed their loans online, that might suggest that bigger loans are increasingly being accessed because of this.

4.4. Repayment of loans

While pay day loans are created to bridge customers with their paycheque that is next utilized sources except that their paycheque to settle their final loan.

Some participants reported looking at cost cost savings reports, taking out fully new pay day loans from another loan provider, borrowing from buddies or household, or utilizing banking account overdrafts to repay their outstanding pay click here now day loans (see Figure 6 Footnote 13 ). Just just What stays not clear is just why they did not access these resources of funds previously—instead of taking right out pay day loans. This might be another indicator that borrowers try not to completely understand that payday loans cost significantly more than other credit choices and underlines the necessity for associated customer training resources.

Figure 6: exactly How have you typically reimbursed the quantity owed for the payday loan(s)? (pick all of that apply)

Supply
Accessed cash through credit line 2
Other 2
Borrowed from a bank or credit union 2
went along to pawnbroker 2
Accessed money through charge card 3
never have yet paid down my loan(s) 4
Sold something 4
Cashed in RRSP or other investments 4
utilized overdraft on a banking account 5
Borrowed from buddies or household 7
Took out an innovative new payday loan(s) 7
Took out cash from a checking account 13
applied my paycheque 70

4.5. Known reasons for loans

Many participants reported taking out fully pay day loans to pay for expenses that are necessary.

As shown in Figure 7, nearly 1 / 2 of participants (45 per cent) stated they typically utilized payday advances for unanticipated necessary costs, such as for example vehicle repairs. Nearly as much (41 per cent) stated they typically utilized payday advances for recurring and therefore expected necessary costs, such as for example rent or bills. Footnote 14