Figure 1: Respondent age bracket
|Respondent age group||per cent|
As shown in Figure 1, 72 per cent of participants had been between 25 and 54 years. Eighty-three per cent lived within an area that is urban and 55 % rented their house (while 32 per cent owned a house with a home loan and nine per cent owned one without home financing. )
More participants had low-to-moderate incomes.
Figure 2: Home 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 isn’t limited to canadians that are low-income. Footnote 11
This information that is demographic help FCAC to tailor educational resources.
4.2. Understanding expenses
Payday loans are a costly option to borrow cash. As shown in Figure 3 Footnote 12, they’ve been much more high priced than many other short-term credit choices.
Figure 3: cash advance cost vs. Different ways of borrowing (According to 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|
Regardless of this, less than 50 % of participants comprehended that a payday loan is more costly than a highly skilled stability or advance loan on a charge card (see Figure 4). This means that that most participants are not alert to the general expenses of all of the short-term credit choices and may even be utilizing payday advances more regularly because of this.
This features the requirement to increase customer understanding in regards to the general expenses of numerous credit items.
Figure 4: nearly all participants didn’t properly see that payday advances cost significantly more than a balance that is outstanding cash loan on credit cards.
4.3. Measurements of loans
Many loans that are payday away by participants had been fairly tiny 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: Can you calculate that total value associated with the last pay day loan you took?
|Approximated value||per cent|
|$1 – $500||55|
|$501 – $1000||20|
|$1001 – $1500||4|
|$1501 or higher||7|
|favor 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 the loan had been over $1,500. It really is uncertain whether these participants had been citing the full total price of borrowing (including interest and costs), had been thinking about a different type of borrowing, or could actually access bigger payday-style loans off their loan providers. Nearly 1 / 2 of those who accessed loans over $1,500 accessed their loans online, that might suggest that bigger loans are increasingly being accessed in this manner.
4.4. Repayment of loans
While pay day loans are created to bridge customers to their next paycheque, one-third utilized sources apart from their paycheque to settle their last loan.
Some participants reported looking at cost cost cost savings records, taking out fully new payday advances from another loan provider, borrowing from buddies or family members, or making use of banking account overdrafts to settle their outstanding pay day loans (see Figure 6 Footnote 13 ). Exactly just What stays not clear is just why they didn’t access these resources of funds previously—instead of taking right out loans that are payday. This may be another indicator that borrowers don’t completely understand that payday loans cost a lot more than other credit choices and underlines the necessity for relevant customer training resources.
Figure 6: exactly How have you typically repaid the total amount owed for the payday loan(s)? (pick all that apply)
|Accessed cash through personal credit line||2|
|lent from the bank or credit union||2|
|went along to pawnbroker||2|
|Accessed money through bank card||3|
|have never yet reduced my loan(s)||4|
|Cashed in RRSP or other assets||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 funds from a checking account||13|
|Used my paycheque||70|
4.5. Known reasons for loans
Many participants reported taking out fully payday advances to pay for necessary costs.
As shown in Figure 7, nearly 50 % of respondents (45 per cent) stated they typically utilized payday loans for unforeseen necessary expenses, such as for example vehicle repairs. Almost as numerous (41 %) stated they typically utilized payday advances for recurring and therefore expected necessary costs, such as for instance lease or bills. Footnote 14