WINNIPEG, Sept. 18 /CNW Telbec/ - The Canadian Payday Loan Association
(CPLA) today released the first statistically-relevant survey ever completed
of payday loan customers in Manitoba. Canada's leading public opinion survey
company, Pollara, completed the survey of 350 payday loan customers from
September 6-13, 2007. The survey is accurate +/-5.2%, 19 times out of 20.
The survey clearly identifies the demographic profile of a payday loan
customer in Manitoba, 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, "why" they use a payday loan instead of other credit options and
"what" they think of the payday loan product.
The survey was submitted to the Manitoba Public Utilities Board as part
of the CPLA's evidence for the board's hearings this November to determine the
maximum fees that payday loan providers can charge in the province. In
addition, the CPLA submitted a report from two focus groups that further
detailed specific opinions about the industry and the payday loan product.
"This ground-breaking research in Manitoba helps us understand who is
using payday loans, why they choose the product and why they prefer the
service over other credit options," says Stan Keyes, President, CPLA.
"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 now talk about this industry's customers in terms that are real and
statistically-relevant. For the purposes of Manitoba's Public Utilities Board,
this will be important and will carry more weight than the usual anecdotes,
'gut hunches' and speculation."
"Payday loan customers are every day Manitobans," says Keyes. "It is
clear that they know what they're doing, know what they're paying and have
good reasons for choosing a payday loan over other available credit options."
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.
- The average payday loan customer is 38 years old
- 77% of customers are currently employed full-time
- Almost half (46%) have completed post-secondary education
- Overall household income reported for payday loan customers tends
to be either on par with - or ahead of - the general Manitoba
population. Notably, only 13% of payday customers reported
household income of less than $25,000 compared to 28% of the
general Manitoba population. 39% of payday loan customers reported
household income in the $25,000-$50,000 bracket compared to 30% of
the general Manitoba population. Another 39% of payday loan
customers reported income of $50,000 or more compared to 42% of the
Manitoba population with the same household income.
Personal Credit Profile
Although some have suggested people use payday loans because they have no
other option, the surveys demonstrate that customers have access to a wide
variety of credit products, however still choose a payday loan for short-term,
- Customers owe an average of $24,357 to various financial
institutions, excluding mortgages
- 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 they used a
payday loan because they had "no other option".
While holding relatively large debt loads, customers average only $300.05
when they borrow from 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
- Customers said they expect to pay an average of $24.67 for a $100
loan for two weeks.
- 79% of customers have paid back all their payday loans on time,
while another 18% have paid back "most" of their loans on time.
- Customers in focus groups indicated they are responsible borrowers
and pay back their loans on time. They indicated they pay back
their loans on time to avoid added interest charges and bad credit.
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. This understanding is on par with their understanding of the
fees and terms that they pay on their mortgage, credit cards and
- Payday loan customers rejected the characterization of them by
critics and in some media that that they are generally poor,
uneducated, are being taken advantage of by payday lenders and
don't really know what they are getting themselves into.
- Customers described themselves as "average, working Canadians" who
from time to time need short-term credit to help get them to their
- Customers in focus groups indicated they make an "informed choice"
when they take out a payday loan and generally only do so in
Payday Lenders vs. Banks and Credit Unions
Many have wondered why someone would take a payday loan rather than
seeking generally less expensive credit options from their bank or credit
union. Customers indicated that they preferred payday loan companies for their
overall convenience and ability to access small-sum loans, whereas banks and
credit unions will only extend loans for larger amounts than the customer
- Customers rate payday loan companies above banks and credit unions
in the areas of, "hours of operation", "fast", "convenient" and
"easy to use". Customers believe payday loan companies are on par
with banks - and ahead of credit unions - when it comes to being
"respectful" and providing "good service". Customers rate payday
loan companies on par with credit unions for providing "good
value" - although significantly recognize that banks provide
- Customers in the focus group indicated that they prefer taking a
loan from a payday loan company over a bank because they only need
a small amount of money for a short period of time, however banks
require them to take a minimum of $500 or $1,000 in credit.
Customers also indicated that payday loan companies did not judge
them or require justification for needing the money, had better
overall customer service and were generally more convenient.
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.
- Almost 60% of customers cite "emergency" or "unexpected" expenses
as the principal reason for requiring a payday loan. A further 18%
use payday loans to avoid bouncing a cheque or avoid incurring late
charges on bills that are due.
- Specific examples of "emergencies" in the focus groups included
unexpected car maintenance, extended sick-leave from work, job
transition and unexpected medical expenses.
For further information:
For further information: Michael Marzolini, Chairman, Pollara, (416)
921-0090, firstname.lastname@example.org; Stan Keyes, President of the Canadian Payday Loan
Association, (905) 645-4434, email@example.com