Payday Loan Customer Survey ~ New Brunswick & Nova Scotia ~ Presented to: Canadian Payday Loan Association October 2007
Mar 31, 2015
Payday Loan Customer Survey~ New Brunswick & Nova Scotia ~
Presented to:Canadian Payday Loan Association
October 2007
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The Canadian Payday Loan Association (CPLA) commissioned POLLARA to conduct a telephone survey of payday loan customers in New Brunswick and Nova Scotia to develop an understanding of payday loan customers’ perceptions of the payday loan industry.
The CPLA represents 23 companies with 501 retail financial services outlets across Canada. Member companies service nearly 2 million Canadians a year by providing short term loans in small amounts to help cover unanticipated expenses.
Lists of payday loan customers were provided by CPLA members. In total, 5,836 records were used for this study.
POLLARA conducted a total of 400 telephone interviews with payday loan customers in New Brunswick and Nova Scotia between August 18th and August 29th, 2007, resulting in an overall margin of error of plus or minus 4.9%, nineteen times out of twenty.
Methodology
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Profile of Respondent Payday Loan Customers in New Brunswick and Nova Scotia
The average age of a respondent payday loan customers in New Brunswick and Nova Scotia is 39 years.
The vast majority are employed full-time (76%).
The majority (59%) of respondent payday loan customers have a post-secondary education from community college (34%), university (18%) or post-graduate/professional programs (7%).
One-half (50%) are married, while 17% are separated or divorced, and 31% have never been married.
Respondent payday loan customers would expect to pay, on average, $28.04 for interest and administration fees to borrow $100 for two weeks.
On average, two-thirds (63%) of respondent payday loan customers normally borrow less than $300 when they get a payday loan.
The average amount of money that respondent payday loan customers in New Brunswick and Nova Scotia currently owe to financial institutions, excluding mortgages, is $23,149.
Respondent payday loan customers have household incomes generally on par with the general population of New Brunswick and Nova Scotia. 56% of the NS and NB residents report household incomes of less than $50,000 a year, compared to 51% of respondent payday loan customers.
Key Findings
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Profile of Respondent Payday Loan Customers in New Brunswick and Nova Scotia (Continued)
Almost all respondent payday loan customers currently have a debit card (99%) and a chequing account
at a bank or credit union (93%). At least half have a savings account at a bank or credit union (62%) or
a major credit card (55%).
Payday Loans Companies vs. Other Financial Institutions
Respondent payday loan customers rate their impressions of payday loan companies lower than other
financial institutions, expect credit card companies (credit card companies receive an average
impression rating of 5.4, while payday loan companies receive a rating of 5.8). Banks receive the
highest average impression rating at 6.8.
There is no significant difference in awareness of the approximate amount of money payday loan
customers pay for all fees for their loans with various financial institutions. The majority of respondents
are aware of the approximate amount they pay for all fees, including administration fees and interest
charges on their payday loans (67%), for their various bank accounts (70%) and credit cards (74%).
Key Findings
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Why Payday Loans?
According to the majority of respondents, the attraction of payday loans has to do with the process being quick and easy (55%), while about one-in-five say the most important reason for their acquiring a payday loan is that they have more convenient locations (18%).
Only 15% of respondent payday loan customers indicate that they use payday loans because they have no other alternative sources for borrowing.
The main reason for securing a payday loan, according to respondents, is that they needed money to pay for necessities (38%). One-in-three (30%) say they needed a payday loan to help with an unexpected expenses, like a car or household expense.
More than four-in-five (84%) respondent payday loan customers say they paid all of the loans that they received in the past back on time, while 13% said they paid most of their loans back on time.
Satisfaction with Payday Loan Experience
On average, respondent payday loan customers rate their satisfaction with their understanding of the terms of their payday loan and when payment on the loan was due at 8.8 out of 10.
Also rated high is satisfaction with the way they were treated by the customer service representative who provided the loan (8.9) and the overall customer service experience (8.6).
Respondent payday loan customers rate payday loan providers higher than banks and credit unions regarding ‘long hours of operation’, ‘fast’, ‘convenient’, ‘easy to use’, ‘good service’, and ‘respectful to me’. Additionally, customers rate payday loan providers higher than credit unions concerning ‘good value’.
Key Findings
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Impressions of Institutions
Q3-7. I’d like to ask you some questions about different kinds of companies in Canada. Using a scale of 1 to 10, where one is “not at all favourable” and ten is “very favourable”, how would you rate your impression ofeach of the following groups of businesses in Canada? (READ AND ROTATE)
4% 29% 42% 10% 9% 7%
11% 32% 37% 13% 8%1%
11% 35% 32% 8% 6% 9%
8% 30% 24% 6%5% 28%
10% 51% 31%4%
3%1%
0% 20% 40% 60% 80% 100%
Banks
Credit Unions
Home And Car Insurance Companies
Payday Loan Companies
Credit Card Companies
Mean:
6.8
6.2
6.2
5.8
5.4
VeryFavourable (10)
SomewhatFavourable (7-9)
Neutral(4-6)
Not VeryFavourable (2-3)
Don’t Know/Refused
Not At AllFavourable (1)
Although banks top the list (at 6.8), respondent payday loan customers in New Brunswick and Nova Scotia do not have a strong favourable impression of the various credit providers mentioned.
Respondent payday loan customers give credit card companies a lower impression rating than payday loan companies (5.4 compared to 5.8, respectively).
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Financial Products or Services Ever Used
Q2A-D. Which of the following financial products or services have you ever had or used in the past? (READ AND ROTATE LIST; ALLOW MULTIPLE MENTIONS)
43% 57%
62% 38%
65% 35%
100%
0% 20% 40% 60% 80% 100%
A payday loan
A personal loan with a bankor credit union
A car loan
A line of credit
Yes No Don’t Know/Refused
All survey participants have, at some point, been payday loan customers.
More than three-in-five respondent payday loan customers in New Brunswick and Nova Scotia have a personal loan with a bank or credit union (65%), or a car loan (62%).
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Financial Products or Services Currently Use
Q8A-G. Which of the following financial products or services do you currently have? (READ AND ROTATE LIST; ALLOW MULTIPLE MENTIONS)
23% 77%
30% 70% 1%
40% 59% 1%
55% 45% 1%
62% 38% 1%
93% 7%
99% 1%
0% 20% 40% 60% 80% 100%
A debit card
A chequing account at a bankor credit union
A savings account at a bankor credit union
A major credit card, such as VISA, MasterCard, AMEX
Overdraft protection at your bank
A home mortgage
A retail credit card, such as a Canadian Tire Card, Sears Card, or a Gas Card
Yes No Don’t Know/Refused
The vast majority of respondent payday loan customers have a debit card (99%) and a chequing account at a bank or credit union (93%).
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Satisfaction with Financial Services and Products
Q9-19. Thinking about the following financial products or services overall, please tell me how satisfied are you with each product or service that you use? Please use a scale from one to ten where 1 means you are “very dissatisfied” and 10 means you are “very satisfied” with the product or service. (READ AND ROTATE)
49% 30% 11% 9%0.02
51% 37% 5%5% 2%
58% 27% 2%4% 10%
60% 32% 5%3%
62% 17% 2%8% 11%
63% 18% 4%4% 10%
76% 20% 2%1%2%
81% 16%1%1%
82% 14%2%2%
83% 14%2%1%1%
89% 8%2%1%
0% 20% 40% 60% 80% 100%
Debit card
Overdraft protection at your bank
Home mortgage
Chequing account at a bank or credit union
Savings account at a bank or credit union
Car loan
Line of credit
Credit card
Personal loan with bank or credit union
Retail credit card
Payday loan
Mean:
8.6
8.0
8.0
8.0
7.8
7.2
7.0
6.8
7.1
6.4
6.1
Satisfied (7-10)
Neutral(4-6)
SomewhatDissatisfied (2-3)
VeryDissatisfied (1)
Respondent payday loan customers in New Brunswick and Nova Scotia are most likely to express satisfaction with their debit card (providing an average rating of 8.6 out of 10).
In contrast, satisfaction with a payday loan is rated slightly lower than credit cards (6.1, compared to 6.4, respectively).
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Knowledge of Fee Payment
Q20-23.Thinking about the various financial products that you hold, do you know the approximate amount that you pay for all fees, including administration fees and interest charges on...? (READ AND ROTATE; What about on...?)
67% 28% 6%
70% 26% 5%
74% 23% 2%
76% 22% 2%
0% 20% 40% 60% 80% 100%
Your home mortgage
Your major credit card
Your savings or chequing account at a bank or credit union
Your payday loan
Yes No Don’t Know/Refused
The majority of respondent payday loan customers report that they are aware of the approximate amount that they pay for all fees, including administration fees and interest charges on their mortgages (76%), major credit cards (74%), savings and chequing accounts (70%), and payday loans (67%).
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Solution to Short Term Financial Need
Q25. If you needed, say, $300 a few days before your next payday, what would you do? (DO NOT READ; PROBE: “Is there anything else?”; ALLOW MULTIPLE MENTIONS)
3%
1%
1%
2%
4%
7%
15%
15%
18%
24%
63%
0% 20% 40% 60% 80%
Use A Payday Advance Or Payroll Loan Company
Borrow From A Family Member
Get A Cash Advance From Credit Card
Do Without/Wait Until Payday
Borrow From A Friend
Use Bank Over-Draft Protection/Line Of Credit
Withdraw Money From SavingsAccount/Other Investments
No Need/Never Short Of Cash
Borrow From An Employer
Other
Don’t Know/Refused
Two-thirds (63%) of respondent payday loan customers in New Brunswick and Nova Scotia say they would use a payday advance or payroll loan company if they needed $300 a few days before their next payday.
One-quarter (24%) say they would borrow the money from a family member.
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Reasons to Choose Payday Loan
Q27. There are many reasons why people choose to obtain a payday loans instead of getting other financial products or services. What was the most important reason you chose to obtain a payday loan in the past rather than using another source of financing? (DO NOT READ LIST; PROBE: Any other reasons?)
5%
9%
4%
4%
4%
6%
7%
8%
15%
18%
55%
0% 20% 40% 60% 80%
Quick And Easy Process
A More Convenient Location
No Other Alternative Source For Borrowing
Discipline Of A Short Term Or Revolving DebtForces Me To Pay It Back More Quickly
Necessity/Needed it in an Emergency
Bad Credit/No Credit Check
Less Expensive Than Other Sources Borrowing Cash
Greater Privacy
Less Harm To My Credit
Other
Don’t Know/Refused
The majority (55%) of respondent payday loan customers feel the most important reason for choosing to obtain a payday loan in the past rather than using another source of financing was because it is a quick and easy process.
Only 15% of respondent payday loan customers feel they use payday loan because they have no other alternative source for borrowing.
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Reasons Payday Loans are Needed
Q28. Which of the following was the main reason why you needed a payday loan? (READ LIST)
2%
2%
4%
7%
7%
10%
30%
38%
0% 20% 40% 60% 80%
For ‘Emergency’ Cash To Pay For Necessities
To Help Out With An Unexpected Expense,Like A Car Or Household Repair
To Help Avoid Late Charges On Routine Bills
To Help Get Through Temporary Reduction In Income
To Avoid Bouncing Cheques
To Buy Something You Wanted
Other
Don’t Know/Refused
Two-in-five (38%) respondent payday loan customers in New Brunswick and Nova Scotia report the main reason why they needed a payday loan was for emergency cash to pay for necessities.
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Amount Normally Borrowed with Payday Loan
Q30. On average, how much money do you normally borrow when you get a payday loan? (ENTER DOLLAR AMOUNT ONLY. NO CENTS)
13%
50%
29%
8%
0%
20%
40%
60%
80%
100%
$1-$150 $151-$300 $301+ Don’t Know/ Refused
Mean: $312.60
On average, two-thirds (63%) of respondent payday loan customers normally borrow less than $300 when they get a payday loan.
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Payday Loan Payments
Q31. Thinking about all the payday loans you received in the past, did you pay back all, most, some, or none of the loans back on time?
Paid Back Some Of The
Loans On Time1%
Paid Back Most Of The Loans
On Time13%
Paid Back None of Loans On
Time1%
Paid Back All The Loans On
Time84%
More than four-in-five (85%) respondent payday loan customers in New Brunswick and Nova Scotia report they paid all the loans they received in the past back on time.
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Satisfaction with Payday Loan Experience
Q32-35. Thinking about all the payday loans you received in the past, did you pay back all, most, some, or none of the loans back on time?
20% 32% 27% 10% 10%3%
46% 43% 8%1%2%1%
53% 35% 9% 2%1%1%
53% 40% 5%1%2%1%
0% 20% 40% 60% 80% 100%
The way you were treated by the customer service representative who provided your loan
Your understanding of the terms of the loanand when payment on the loan was due
The overall customer service experience
The total cost of the payday loan, including interest and administration fees
Mean:
8.9
8.8
8.6
6.3
VerySatisfied (10)
SomewhatSatisfied (7-9)
Neutral(4-6)
SomewhatDissatisfied (2-3)
VeryDissatisfied (1)
The vast majority of respondents said they are satisfied with the way they were treated by the customer service representative who provided their loan (93%) and the their understanding of the terms of the loan and when payment on the loan was due (88%).
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Attributes of Financial Institutions
Q35-41. (READ AND ASK ALL) Now I would like you to think about three types of companies that offer cash advances or loans, namely, banks, credit unions, and payday loan providers. I am going to read you a list of attributes that you might consider when getting a cash advance or short-term loan, and I would like you totell me which of the three providers you think is best described by the attribute. (READ AND ROTATE)
26% 14% 54% 7%
48% 8% 37% 8%
50% 9% 34% 7%
69% 5% 25% 1%
79% 5% 15% 1%
84% 3% 12%1%
86% 2%10%2%
0% 20% 40% 60% 80% 100%
Long hours of operation
Fast
Convenient
Easy to use
Good service
Respectful to me
Good value
Payday LoanProvider
CreditUnion
Bank Don’t Know/Refused
Respondent payday loan customers rate payday loan providers higher than banks and credit unions regarding ‘long hours of operation’, ‘fast’, ‘convenient’, ‘easy to use’, ‘good service’, and ‘respectful to me’. Also, respondents rate payday loan providers higher than credit unions concerning ‘good value’.
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Payday Loans & Related Issues
Q43-45. I’m going to read you a list of statements. For each, please indicate whether you agree or disagree, using a scale from one to ten where one means you “disagree strongly” and ten means you “agree strongly”.(READ AND ROTATE)
6% 8% 12% 8% 65% 2%
46% 32% 17% 3%2%1%
47% 33% 17% 2%2%1%
0% 20% 40% 60% 80% 100%
Since the large banks may not provide short-term loans for small amounts, Canadians who need or want these
services should have the option of obtaining them from payday loans providers
Since credit cards can be used at any time, as long as the credit limit is not exceeded, you should also be
allowed to get a payday loan whenever you need it, as long as you repay the loan
If you take out a payday loan, the payday loan provider should be able to share your personal financial
information with other lenders, banks and credit unions
Mean:
8.3
8.1
2.6
StronglyAgree (10)
SomewhatAgree (7-9)
Neutral(4-6)
SomewhatDisagree (2-3)
DisagreeStrongly (1)
Don’t Know/Refused
Eight-in-ten (80%) respondent payday loan customers agree that since large banks may not provide short-term loans for small amounts, Canadians who need or want these services should have the option of obtaining them from payday loans providers.
Two-thirds (65%) of respondent payday loan customers strongly disagree that a payday loan provider should be able to share your personal financial information with other lenders, banks, and credit unions.
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