First-Ever Pollara Survey on Payday Loan Consumers in Alberta

    EDMONTON, Sept. 26 /CNW/ - The Canadian Payday Loan Association (CPLA)
commissioned POLLARA to conduct a telephone survey of payday loan customers in
Alberta to develop an understanding of their perceptions on the payday loan
industry. The interview was conducted with 401 payday loan customers in
Alberta between August 28th and September 5th, 2008, resulting in an overall
margin of error of +/- 4.9%, 19 times out of 20.
    The survey clearly identifies the demographic profile of a payday loan
customer in Alberta, their specific attitudes and opinions about payday loans
and their other credit options. Previous to today's survey, the government,
industry and critics were left to guess or assume "who" a typical payday loan
customer is, "why" they use a payday loan instead of other credit options and
"what" they think of the payday loan product.
    "This survey tells us that payday loan customers in Alberta choose this
service over banks and credit unions," says Stan Keyes, President, CPLA.
"Customers are well educated and responsible borrowers with many credit
options who know exactly what they are doing and what they are paying."
    "After years of surveys in the financial sector, I'm surprised by the
sophistication and knowledge of payday loan consumers," says Michael
Marzolini, Chairman of Pollara. "This data puts to rest a number of
widely-held misconceptions about the payday loan industry. For the first time,
we can talk about this industry's customers in terms that are real and
statistically-relevant. This research is important and should carry more
weight than the usual anecdotes, 'gut hunches' and speculation."
    "This survey will begin to put to rest inaccurate comments made about the
education, income, knowledge and reasons why people look to payday loans
instead of other forms of credit," added Keyes.

    Highlights of the surveys include:

    Demographics of Payday Loan Customers

    Contrary to conventional assumptions, the average payday loan customer is
employed, educated and is not representative of "low income" households.

    -   79% of customers are currently employed full-time
    -   More than half (55%) have completed post-secondary education
    -   about one-half (53%) of respondent payday loan customers have annual
        household incomes of $50,000 or higher

    Personal Credit Profile

    Although some have suggested people use payday loans because they have no
other option, the survey demonstrates that customers have access to a wide
variety of credit products, however still choose a payday loan for short-term,
small-sum borrowing.

    -   Customers have access to a variety of credit options, but choose a
        payday loan over a line of credit, credit card, retail card,
        overdraft or other forms of credit largely due to the "convenience"
        of the payday loan product, "ease of use" and "long hours of
        operation". Only 15% of customers indicated that they used a payday
        loan because they had "no other option".

    Borrowing Habits

    While holding relatively large debt loads, customers borrow an average of
$456.39 when they visit a payday loan outlet. Contrary to some critics that
say that customers can't afford to repay their loans, a large majority of
customers say they have paid back every loan they have ever taken on time.

    -   The average payday loan taken out by a payday loan customer is
        $456.39, with slightly less than half (49%) borrowing $300 or less.
    -   Customers said they expect to pay an average of $31.31 for a $100
        loan for two weeks.
    -   82% of customers have paid back all their payday loans on time, while
        another 13% have paid back "most" of their loans on time.

    Educated and Informed Consumers

    A major criticism levelled against the payday loan industry has been that
it "takes advantage" of people who don't really understand what they are
"getting themselves into". Customers rejected this notion and indicated they
are informed and deliberate borrowers with a very strong level of knowledge of
the terms and fees they pay for their loans.

    -   Customers clearly understand the costs and terms of their payday loan
        (66%). This understanding is on par with their understanding of the
        fees and terms that they pay on their mortgage (72%), credit cards
        (68%) and bank fees (65%).

    Payday Lenders vs. Banks and Credit Unions

    Payday loan customers are deliberate in their reasons for selecting
payday loan outlets over banks or credit unions for their short-term borrowing

    Customers indicated that they preferred payday loan companies for their
overall convenience and ability to access small-sum loans, whereas banks and
credit unions may only extend loans for larger amounts.

    -   Customers rate payday loan companies ahead of banks and credit unions
        in the areas of hours of operation, speed, convenience, ease of use,
        respectfulness and good service.
    -   8 out of 10 payday loan customers are satisfied with the overall
        customer service experience they received from a payday loan service
    -   More than three-quarters (77%) of respondent payday loan customers
        agree that they should be able to get a payday loan whenever they
        need it, as long as their credit limit is not exceeded and the loan
        is repaid on time.
    -   Seven-in-ten (71%) also agree that as 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

    Reasons for Needing a Payday Loan

    Customers indicated that they generally seek payday loans for emergency
situations or unexpected expenses. They often require only a small amount of
money to hold them over until their next payday and prefer to borrow a few
hundred dollars rather than getting more credit than they want with a credit
card or line of credit.

    -   Two-in-five customers (42%) cite "emergency" expenses as the
        principal reason for requiring a payday loan.
    -   Another 26% cited unexpected expenses such as car or household
        repairs as the reason for needing a payday loan.
    -   A further 10% said they took out a payday loan to avoid service
        charges on bills or bouncing cheques.
    -   Only 5% of customers said they took out a payday loan to
        "buy something".

For further information:

For further information: Stan Keyes, President of the Canadian Payday
Loan Association, Email:, (905) 522-2752

Organization Profile

Canadian Payday Loan Association (CPLA)

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