4.1. Demographics. Many borrowers inside 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 home (while 32 per cent owned https://personalinstallmentloans.org a property with home financing and nine per cent owned one without home financing. )
More respondents had incomes that are low-to-moderate.
Figure 2: Home income
|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. Nevertheless, 20 per cent reported home incomes surpassing $80,000, with seven per cent over $120,000, demonstrating that cash advance use just isn’t 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 costly option to borrow funds. As shown in Figure 3 Footnote 12, they truly are a lot more high priced than many other short-term credit options.
Figure 3: cash advance price vs. Different ways of borrowing (According to a $300 loan taken for a fortnight)
|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 credit card (see Figure 4). This means that that most participants are not alert to the relative expenses of all of the credit that is short-term and may even be making use of payday advances more regularly because of this.
This shows the necessity to increase customer understanding in regards to the general expenses of numerous credit products.
Figure 4: nearly all participants didn’t properly observe that payday loans cost a lot more than a balance that is outstanding cash loan on credit cards.
4.3. Measurements of loans
Many payday advances taken down 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 percent) reported loans of $500 or less. Twenty per cent reported loans of $500-$1,000, while only four per cent reported loans of $1,001-$1,500.
Figure 5: Could you calculate that total value associated with the final cash advance you took?
|Projected value||per cent|
|$1 – $500||55|
|$501 – $1000||20|
|$1001 – $1500||4|
|$1501 or maybe more||7|
|favor to not ever respond to||14|
In Canada, a regulated cash advance cannot go beyond $1,500, yet seven % stated the value of these loan had been over $1,500. It’s not clear whether these participants had been citing the full total price of borrowing (including interest and costs), had been considering a different type of borrowing, or had the ability to access bigger payday-style loans off their loan providers. Almost 50 % of people who accessed loans over $1,500 accessed their loans online, which could suggest that bigger loans are increasingly being accessed that way.
4.4. Repayment of loans
While payday advances are made to bridge customers for their paycheque that is next utilized sources other than their paycheque to settle their final loan.
Some participants reported looking at cost cost savings records, taking out fully new pay day loans from another loan provider, borrowing from buddies or household, or utilizing banking account overdrafts to settle their outstanding pay day loans (see Figure 6 Footnote 13 ). Just What stays not clear is just why they didn’t access these resources of funds previously—instead of taking right out pay day loans. This might be another indicator that borrowers usually do not understand that payday fully loans cost a lot more than other credit choices and underlines the necessity for related customer training resources.
Figure 6: exactly exactly 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|
|went along to pawnbroker||2|
|Accessed money through bank card||3|
|never have 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 household||7|
|Took out a fresh payday loan(s)||7|
|Took out cash from a checking account||13|
|applied my paycheque||70|
4.5. Cause of loans
Many participants reported taking out fully payday advances to pay for expenses that are necessary.
As shown in Figure 7, very nearly half participants (45 per cent) stated they typically utilized payday advances for unforeseen necessary costs, such as for instance vehicle repairs. Almost as much (41 %) stated they typically utilized payday advances for recurring and therefore expected necessary expenses, such as for example lease or utility bills. Footnote 14