New Payday Loan Industry Survey Results available.
(Access to the actual survey is available at the bottom)
You want to know who your customer is? Still trying to figure out who uses payday loans, why they use them and what they really want?
A most interesting payday loan survey is now available! It was sponsored by the Government of Alberta, Canada. It reveals some great insight into the wants and needs of the following respondents to the survey:
- individual consumers and consumer organizations;
- payday loan businesses;
- credit counselling agencies;
- “other stakeholders.”
(Our Thoughts: Don’t let the fact that this survey was conducted in Alberta, Canada cause you to dismiss it as having little relevance to your situation. We have access to multiple studies in various locales and the conclusions are very much the same. Micro-lending consumers are similar throughout the world. And micro-lending products, like the payday loan, car title loans, and pawn services will continue to be in great demand as long as consumers breathe. Government cannot legislate our product out of existence nor will the so-called “consumer protectionists” ever reach into their own product to help an anonymous consumer in need!)
Leger Market Research Company, the firm hired to perform the survey, listed the folowing conclusions. These HIGHLIGHTS are insightful as there are some surprising conclusions to be drawn from their results.
User Satisfaction with Payday Loan Lenders The majority of payday loan users are satisfied with their most recent payday loan experience, including 49% who are very satisfied. Users are highly satisfied with the rates and terms being explained to them (82%) but their satisfaction with the cost of the payday loan is substantially lower (54%).
(Our Thoughts: Why can’t the so-called consumer protectionists who continually attack the payday loan industry GET THIS THROUGH THEIR THICK SKULLS!)
Motivations for Using Payday Loans
Oct 30, 2007 09:00 ET
First-Ever Survey of Payday Loan Consumers in British Columbia Conducted by Pollara
Customers deliberately choose payday loan outlets over banks and credit unions for short-term borrowing
VICTORIA, BRITISH COLUMBIA--(Marketwire - Oct. 30, 2007) - The Canadian Payday Loan Association (CPLA) today released the first statistically-relevant survey ever completed of payday loan customers in British Columbia. Canada's leading public opinion survey company, Pollara, completed the survey of 400 payday loan customers from August 14 to September 19, 2007. The survey is accurate +/-4.9%, 19 times out of 20.
The survey clearly identifies the demographic profile of a payday loan customer in British Columbia, 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 groundbreaking survey tells us that payday loan customers in British Columbia deliberately choose this service over banks and credit unions," says Stan Keyes, President, CPLA. "Customers are well educated and responsible borrowers with many credit options. They 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.
Personal Credit ProfileAlthough 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.
half (56%) borrowing less than $300.
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.
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 needs.Customers indicated they preferred payday loan companies for the overall convenience and ability to access small-sum loans, whereas banks and credit unions will only extend loans for larger amounts.
Reasons for Needing a Payday Loan
Customers indicated 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.
UPDATE: The Canadian federal government has mandated the Provinces to enact caps on payday loans. The Canadian Payday Loan Association is lobbying hard for a $20 per $100 fee structure. The payday loan industry is very optimistic regarding the outcome of these negotiations. The general tone of the discussions and the responses of the regulators for the Provinces is very positive. As a result, several of the large, publicly traded payday loan companies are preparing for expansion in Canada. Dollar is a primary candidate.
OBSERVATION: As this dialog between the Feds, the Provinces, the Payday Loan Industry Trade Group and various Canadian payday loan companies continue, increased customer acquisition opportunities exist. In other words, dialog results in increased customer awareness which drives additional customer demand; very nice!
For a thorough discussion of the Canadian payday loan industry and access to our payday loan training materials, we recommend you proceed to PaydayLoanIndustry.com We have a "ton" of material relevant to the Canadian payday loan product.
Canadian Payday Loan Association Applauds New British Columbia Law to Regulate Payday Loan Industry
Will participate in consultations to ensure consumer protection and reasonable fees
VICTORIA, BRITISH COLUMBIA--(Marketwire - Oct. 24, 2007) - The Canadian Payday Loan Association (CPLA) today applauded the British Columbia government for passing important payday loan legislation that will regulate the industry and balance consumer protection with a viable industry.
The new provincial legislation follows changes to the Criminal Code in May 2007 that now allow provinces - for the first time - the authority to regulate the payday loan industry as long as they meet the criteria of passing consumer protection legislation and setting maximum allowable fees.
The CPLA has been working with the British Columbia government over the past two years towards effective legislation and regulation.
British Columbia's new law includes many elements of the CPLA's 'Code of Best Business Practices' - introduced two years ago and monitored by an independent Ethics and Integrity Commissioner to ensure adherence among CPLA members.
"The Government of British Columbia has shown great leadership in wanting to protect consumers and allow for a viable payday loan industry," said Stan Keyes, President of the CPLA. "The CPLA will participate actively in all consultations on regulations and rate setting on behalf of our members."
British Columbia's new law effectively harmonizes the province's approach to regulation with recent legislation in Saskatchewan, Manitoba and Nova Scotia. The governments of Alberta, New Brunswick and Ontario are expected to move forward with their own legislation or regulations in the coming months.
The CPLA is currently involved in Canada's first rate setting process for establishing maximum allowable fees for payday loans in the province of Manitoba. The CPLA's submission and supporting evidence for a reasonable rate can be found at www.cpla-acps.ca.
The CPLA represents 23 of the most responsible payday loan companies in the industry who are committed to a voluntary Code of Best Business Practices, overseen by an independent Ethics and Compliance Commissioner. Upwards of 2 million Canadians use payday loans every year to cover small-sum, short-term emergencies. Loans are capped at $1,500, with the average loan being $300 for 10 days.
Category: Payday loans