Figure 1: Respondent generation
| Respondent age group | % |
|---|---|
| 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 respondents had been between 25 and 54 years old. Eighty-three per cent lived within an metropolitan area, 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 income
| Home income | % |
|---|---|
| not as much as $32K | 28 |
| $32K – |
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. Nonetheless, 20 per cent reported home incomes surpassing $80,000, with seven % over $120,000, demonstrating that cash advance use isn’t limited to low-income Canadians. Footnote 11
This demographic information will help FCAC to tailor educational resources.
4.2. Understanding expenses
Payday advances can be a way that is expensive borrow funds. As shown in Figure 3 Footnote 12, these are generally far more high priced than many other credit that is short-term.
Figure 3: cash advance price vs. Different ways of borrowing (considering a $300 loan taken for two weeks)
| Borrowing from personal credit line | Overdraft security on a banking account | advance loan on credit cards | cash advance |
|---|---|---|---|
| $5.81 | $7.19 | $7.42 | $63.00 |
Not surprisingly, less than 50 % of participants comprehended that a payday loan is more costly than a highly installment loans skilled stability or advance loan on a charge card (see Figure 4). This suggests that most respondents are not conscious of the general expenses of all of the credit that is short-term and might be utilizing pay day loans more frequently because of this.
This features the requirement to increase customer awareness concerning the general expenses of numerous credit items.
Figure 4: nearly all participants would not properly see that payday advances cost significantly more than an outstanding stability or advance loan on a charge card.
| Response | Percentage |
|---|---|
| Right | 43 |
| Wrong | 57 |
4.3. Size of loans
Many loans that are payday down by participants were fairly 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 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 worth for the final cash advance you took?
| Calculated value | % |
|---|---|
| $1 – $500 | 55 |
| $501 – $1000 | 20 |
| $1001 – $1500 | 4 |
| $1501 or higher | 7 |
| favor not to ever respond to | 14 |
In Canada, a regulated pay day loan cannot exceed $1,500, yet seven % stated the worth of these loan ended up being over $1,500. It’s uncertain whether these participants had been citing the full total price of borrowing (including interest and costs), 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 in this way.
4.4. Repayment of loans
While pay day loans are made to bridge customers to their next paycheque, one-third utilized sources aside from their paycheque to settle their last loan.
Some participants reported looking at cost cost savings records, taking right out new pay day loans from another lender, borrowing from buddies or family members, or bank that is using overdrafts to settle their outstanding pay day loans (see Figure 6 Footnote 13 ). Exactly What stays uncertain is the reason why they did not access these sourced elements of funds previously—instead of taking out fully pay day loans. This may 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 relevant customer training resources.
Figure 6: exactly How have you typically repaid the quantity owed for the payday loan(s)? (pick all of that apply)
| Supply | percent cash that is accessed credit line | 2 |
|---|---|---|
| Other | 2 | |
| lent from the bank or credit union | 2 | |
| decided to go to pawnbroker | 2 | |
| Accessed money through bank card | 3 | |
| never have yet paid my loan(s) | 4 | |
| Sold something | 4 | |
| Cashed in RRSP or any other assets | 4 | |
| utilized overdraft on a bank account | 5 | |
| Borrowed from buddies or family | 7 | |
| Took out a fresh payday loan(s) | 7 | |
| Took out funds from a checking account | 13 | |
| applied 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, very nearly 50 % of participants (45 per cent) stated they typically utilized payday advances for unanticipated necessary costs, such as for example vehicle repairs. Almost as much (41 per cent) stated they typically used loans that are payday recurring and therefore expected necessary costs, such as for instance lease or bills. Footnote 14