Transcript Payday Loan Customer Survey ~ New Brunswick & Nova Scotia ~

Payday Loan Customer Survey
~ New Brunswick & Nova Scotia ~
Presented to:
Canadian Payday Loan Association
October 2007
Methodology
 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.
1
Key Findings
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.
2
Key Findings
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%).
3
Key Findings
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’.
4
Impressions of Institutions
 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).
Mean:
3%
6.8
51%
31%
Banks 10%
4% 1%
Credit Unions 8%
30%
Home And Car Insurance Companies 11%
Payday Loan Companies 11%
Credit Card Companies 4%
0%
Very
Somewhat
Favourable (10) Favourable (7-9)
24%
35%
32%
29%
20%
Neutral
(4-6)
6%5%
6.2
32%
8% 6% 9% 6.2
37%
13% 8%1% 5.8
42%
40%
28%
60%
Not Very
Favourable (2-3)
10% 9% 7% 5.4
80%
100%
Not At All
Don’t Know/
Favourable (1) Refused
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 of
each of the following groups of businesses in Canada? (READ AND ROTATE)
5
Financial Products or Services Ever Used
 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%).
A payday loan
100%
A personal loan with a bank
or credit union
65%
0%
38%
62%
A car loan
A line of credit
35%
43%
57%
20%
40%
Yes
No
60%
80%
100%
Don’t Know/Refused
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)
6
Financial Products or Services Currently Use
 The vast majority of respondent payday loan customers have a debit card (99%) and a chequing
account at a bank or credit union (93%).
A debit card
A chequing account at a bank
or credit union
93%
A savings account at a bank
or credit union
A major credit card, such as VISA,
MasterCard, AMEX
A retail credit card, such as a Canadian
Tire Card, Sears Card, or a Gas Card
0%
7%
38%
62%
55%
Overdraft protection at your bank
A home mortgage
1%
99%
45%
40%
70%
23%
1%
1%
59%
30%
1%
1%
77%
20%
40%
Yes
No
60%
80%
100%
Don’t Know/Refused
Q8A-G. Which of the following financial products or services do you currently have? (READ AND ROTATE LIST;
ALLOW MULTIPLE MENTIONS)
7
Satisfaction with Financial Services and Products
 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).
Mean:
8%2%1%
89%
Debit card
8.6
Overdraft protection at your bank
83%
14%2%1%1% 8.0
Home mortgage
82%
14%2%2% 8.0
Chequing account at a bank or credit union
81%
16%1%1% 8.0
76%
Savings account at a bank or credit union
Car loan
63%
Line of credit
62%
Credit card
60%
Personal loan with bank or credit union
20%
18%
17%
Retail credit card
51%
Payday loan
49%
0%
20%
Satisfied
(7-10)
4%4% 10%
2% 8%
11%
27%
5%5% 2% 6.4
30%
Neutral
(4-6)
60%
7.0
2%
4% 10% 7.1
37%
40%
7.2
5%3% 6.8
32%
58%
2%1%
2% 7.8
11%
80%
Somewhat
Dissatisfied (2-3)
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)
9%0.02 6.1
100%
Very
Dissatisfied (1)
8
Knowledge of Fee Payment
 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%).
Your home mortgage
Your major credit card
74%
Your savings or chequing account at a
bank or credit union
23%
26%
70%
67%
Your payday loan
0%
22% 2%
76%
20%
40%
Yes
No
28%
60%
80%
2%
5%
6%
100%
Don’t Know/Refused
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...?)
9
Solution to Short Term Financial Need
 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.
Use A Payday Advance Or Payroll Loan Company
63%
24%
Borrow From A Family Member
Get A Cash Advance From Credit Card
18%
Do Without/Wait Until Payday
15%
Borrow From A Friend
15%
7%
Use Bank Over-Draft Protection/Line Of Credit
Withdraw Money From Savings
Account/Other Investments
No Need/Never Short Of Cash
4%
2%
Borrow From An Employer 1%
Other 1%
Don’t Know/Refused
0%
3%
20%
40%
60%
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)
80%
10
Reasons to Choose Payday Loan
 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.
Quick And Easy Process
55%
18%
A More Convenient Location
No Other Alternative Source For Borrowing
Discipline Of A Short Term Or Revolving Debt
Forces Me To Pay It Back More Quickly
15%
8%
Necessity/Needed it in an Emergency
7%
Bad Credit/No Credit Check
6%
Less Expensive Than Other Sources Borrowing Cash
4%
Greater Privacy
4%
Less Harm To My Credit
4%
Other
Don’t Know/Refused
0%
9%
5%
20%
40%
60%
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?)
80%
11
Reasons Payday Loans are Needed
 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.
For ‘Emergency’ Cash To Pay For Necessities
38%
To Help Out With An Unexpected Expense,
Like A Car Or Household Repair
30%
10%
To Help Avoid Late Charges On Routine Bills
7%
To Help Get Through Temporary Reduction In Income
To Avoid Bouncing Cheques
7%
To Buy Something You Wanted
4%
Other
2%
Don’t Know/Refused
0%
2%
20%
40%
Q28. Which of the following was the main reason why you needed a payday loan? (READ LIST)
60%
80%
12
Amount Normally Borrowed with Payday Loan
 On average, two-thirds (63%) of respondent payday loan customers normally borrow less than $300
when they get a payday loan.
100%
Mean: $312.60
80%
60%
50%
40%
20%
29%
13%
8%
0%
$1-$150
$151-$300
$301+
Don’t Know/
Refused
Q30. On average, how much money do you normally borrow when you get a payday loan? (ENTER DOLLAR
AMOUNT ONLY. NO CENTS)
13
Payday Loan Payments
 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.
Paid Back None
Paid Back
of Loans On
Some Of The
Time
Loans On Time
1%
1%
Paid Back Most
Of The Loans
On Time
13%
Paid Back All
The Loans On
Time
84%
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?
14
Satisfaction with Payday Loan Experience
 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%).
Mean:
The way you were treated by the customer
service representative who provided your loan
53%
Your understanding of the terms of the loan
and when payment on the loan was due
53%
The total cost of the payday loan, including
interest and administration fees
0%
Very
Satisfied (10)
35%
20%
32%
20%
Somewhat
Satisfied (7-9)
9% 2%1% 8.8
43%
46%
The overall customer service experience
1%
2% 8.9
5%1%
40%
40%
Neutral
(4-6)
27%
60%
Somewhat
Dissatisfied (2-3)
1%2%
8%
1%8.6
10% 10%3% 6.3
80%
100%
Very
Dissatisfied (1)
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?
15
Attributes of Financial Institutions
 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’.
Long hours of operation
86%
2%10%2%
Fast
84%
3% 12% 1%
79%
Convenient
5% 15% 1%
69%
Easy to use
Good service
50%
Respectful to me
48%
26%
Good value
0%
20%
5%
9%
34%
8%
14%
37%
54%
40%
Payday Loan
Provider
25%
Credit
Union
60%
Bank
1%
7%
8%
7%
80%
100%
Don’t Know/
Refused
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 to
tell me which of the three providers you think is best described by the attribute. (READ AND ROTATE)
16
Payday Loans & Related Issues
 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.
Mean:
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
46%
32%
6% 8% 12% 8%
0%
Strongly
Agree (10)
33%
47%
Somewhat
Agree (7-9)
20%
Neutral
(4-6)
1%
2%
17% 2%
8.3
2%
1%
17% 3%
65%
40%
60%
Somewhat
Disagree (2-3)
2%
80%
Disagree
Strongly (1)
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)
8.1
2.6
100%
Don’t Know/
Refused
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