The Canadian Payday Loan Association (CPLA) commissioned ..

1
Payday Loan Customer Survey Saskatchewan



Presented to Canadian Payday Loan Association
September 2007
2
Methodology

• The Canadian Payday Loan Association (CPLA)
  commissioned POLLARA to conduct a telephone
  survey of payday loan customers in Saskatchewan
  to develop an understanding of payday loan
  customers perceptions of the payday loan
  industry.
• The CPLA represents 23 companies with 484 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, 8,212 records were used
  for this study.
• POLLARA conducted a total of 400 telephone
  interviews with payday loan customers in
  Saskatchewan between August 27th and September
  12th, 2007, resulting in an overall margin of
  error of plus or minus 4.9, nineteen time out of
  twenty.

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Key Findings

• Profile of Respondent Payday Loan Customers in
  Saskatchewan
• The average age of respondent payday loan
  customers in Saskatchewan is 38 years.
• The vast majority are employed full-time (71).
• About one-half (53) of respondent payday loan
  customers have a post-secondary education from
  community college (31), university (19) or
  post-graduate/professional programs (2).
• On average, more than two-thirds (69) of
  respondent payday loan customers normally borrow
  less than 300 when they get a payday loan, on
  average.
• On average, customers in Saskatchewan borrow less
  than their counterparts in British Columbia
  (381.14), Ontario (349.53), New Brunswick and
  Nova Scotia (312.61), and Manitoba (300.05).
• Respondent payday loan customers would expect to
  pay, on average, 22 for interest and
  administration fees to borrow 100 for two weeks.
  
• The average amount of money that respondent
  payday loan customers in Saskatchewan currently
  owe to financial institutions, excluding
  mortgages, is 26,855.
• About one-half (49) are married, while 14 are
  separated or divorced and 30 have never been
  married.
• Respondent payday loan customers have household
  incomes generally on par with the general
  Saskatchewan population. 53 of Saskatchewan
  residents report household incomes of less than
  50,000 a year, compared to 49 of respondent
  payday loan customers.

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Key Findings

• Profile of Respondent Payday Loan Customers in
  Saskatchewan (Continued)
• Almost all respondent payday loan customers
  currently have a debit card (90) and a chequing
  account at a bank or credit union (90).
  Two-in-three (63) have a savings account at a
  bank or credit union and 54 have a major credit
  card. Less than one-in-four (21) payday loan
  customers in Saskatchewan currently have a home
  mortgage.
• Payday Loans Companies vs. Other Financial
  Institutions
• Respondent payday loan customers provide payday
  loan companies with a similar average impression
  rating as credit unions and a higher average
  rating than credit card companies (payday loans
  companies receive an average score of 6.2 and
  credit unions receive a score of 6.3 out of 10.
  Credit card companies receive the lowest average
  impression rating at 5.8).
• Respondent payday loan customers in Saskatchewan
  provide payday loan providers with a higher
  average impression rating than their counterparts
  in British Columbia (6.1), New Brunswick and Nova
  Scotia (5.8), Ontario (5.5), and Manitoba (5.0).
• 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. A similar
  proportion of respondents are aware of the
  approximate amount they pay for all fees,
  including administration fees and interest
  charges on their payday loans (76), for their
  various bank accounts (78), credit cards (82),
  and their home mortgage (85).

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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 (66), while about
  two-in-five say the most important reason for
  their acquiring a payday loan is because of more
  convenient locations (20).
• Only 23 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 (52). One-in-four
  (23) say they needed a payday loan to help with
  an unexpected expense, like a car or household
  expense.
• Almost all respondent payday loan customers in
  Saskatchewan report that they paid all the loans
  they received in the past back on time (83) or
  most of the loans back on time (11).
• Satisfaction with Payday Loan Experience
• On average, respondent payday loan customers rate
  their satisfaction with the customer service
  representative who provided their loan at 8.1 out
  of 10.
• Also rated high is respondent satisfaction with
  their understanding of the terms of their payday
  loan and when payment on the loan was due (8.0),
  and satisfaction with their overall customer
  service experience (8.0).
• The majority of respondent payday loan customers
  in Saskatchewan think fast, long hours of
  operation, easy to use and convenient best
  describe payday loan providers, compared to banks
  and credit unions. Additionally, a higher
  proportion of respondent payday loan customers
  think respectful to me, good service and
  good value best describes payday loan providers
  compared to credit unions.

6
Impressions of Institutions

• Respondent payday loan customers provide payday
  loan companies with a similar average impression
  rating as credit unions and a higher average
  rating than credit card companies (6.2, 6.3, and
  5.8, respectively).

Mean 7.4 6.7 6.3 6.2 5.8
Banks Home And Car Insurance Companies Credit
Unions Payday Loan Companies Credit Card Companies
VeryFavourable (10)
SomewhatFavourable (7-9)
Neutral(4-6)
Not VeryFavourable (2-3)
Dont Know/Refused
Not At AllFavourable (1)
Q3-7. Id 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)
7
Financial Products or Services Ever Used

• About one-in-two respondent payday loan customers
  have used a car loan (56), a personal loan with
  a bank or a credit union (54), or a line of
  credit (47).

A payday loan A car loan A personal loan with a
bankor credit union A line of credit
Yes
No
Dont 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)
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Financial Products or Services Currently Use

• Nine-in-ten respondent payday loan customers
  currently have a debit card and a chequing
  account at a bank or credit union (90,
  respectively).

A debit card A chequing account at abank or
credit union A savings account at abank or
credit union A major credit card, such as VISA,
MasterCard, AMEX Overdraft protection at your
bank A retail credit card, such as a Canadian
Tire Card, Sears Card, or a Gas Card A home
mortgage
Yes
No
Dont Know/Refused
Q8A-G. Which of the following financial products
or services do you currently have? (READ AND
ROTATE LIST ALLOW MULTIPLE MENTIONS)
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Satisfaction with Financial Services Products

• Respondent payday loan customers in Saskatchewan
  are most likely to express satisfaction with
  their debit card (providing an average rating of
  8.4 out of 10).
• Satisfaction with payday loans is rated slightly
  lower (6.4) than the average score for retail
  credit cards (6.8).

Mean 8.4 8.0 7.7 7.6 7.7 7.4 7.2 6.8 7.4 7.3 6.4
Debit card Chequing account at a bank or credit
union Overdraft protection at your bank Savings
account at a bank or credit union Home
mortgage Personal loan with bank or credit
union Credit card Retail credit card Line of
credit Car loan Payday loan
Satisfied (7-10)
Neutral(4-6)
SomewhatDissatisfied (2-3)
VeryDissatisfied (1)
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)
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Knowledge of Fee Payment

• The vast 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 (85), major credit
  cards (82), savings and chequing accounts (78),
  and payday loans (76).

Your home mortgage Your major credit card Your
savings or chequing account ata bank or credit
union Your payday loan
Yes
No
Dont 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...?)
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Solution to Short Term Financial Need

• Two-in-five (43) respondent payday loan
  customers in Saskatchewan say that they would use
  a payday advance or payroll loan company if they
  needed 300 a few days before their next payday.
• On-in-three (34) say they would borrow the money
  from a family member (20) or a friend (14).

Use A Payday Advance Or Payroll Loan Company
Borrow From A Family Member Do Without/Wait
Until Payday Withdraw Money From Savings
AccountAnd Other Investments Borrow From A
Friend Get A Cash Advance From Credit Card
Use Bank Over-Draft Protection/Line Of Credit
No Need/Never Short Of Cash Borrow From An
Employer Payday Loan Other Dont
Know/Refused
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)
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Reasons to Choose Payday Loan

• Two-in-three respondent payday loan customers
  report that the most important reason for
  choosing to obtain a payday loan in the past,
  rather than using another source of credit was
  because it is a quick and easy process (66).

Quick And Easy Process No Other Alternative
Source For Borrowing A More Convenient Location
Discipline Of A Short Term Or No Revolving
DebtForces Me To Pay It Back More Quickly Less
Harm To My Credit Less Expensive Than Other
SourcesOf Borrowing Cash Greater
Privacy Necessity/Needed It/Emergency Other
Dont Know/Refused
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?)
13
Reasons Payday Loans is Needed

• One-in-two (52) respondent payday loan customers
  in Saskatchewan report that the main reason why
  they needed a payday loan was because they needed
  emergency cash to pay for necessities.

For Emergency Cash To Pay For Necessities To
Help Out With An Unexpected Expense,Like A Care
Or Household Repair To Buy Something You Wanted
To Help Avoid Late Charges On Routine Bills
To Avoid Bouncing Cheques To Help Get
Through A Temporary Reduction In Income All Of
The Above Depends On Situation No
Credit Dont Know/Refused
Q28. Which of the following was the main reason
why you needed a payday loan? (READ LIST)
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Amount Normally Borrowed with Payday Loan

• On average, more than two-thirds (69) of
  respondent payday loan customers normally borrow
  less than 300 when they get a payday loan, on
  average.

Mean 266.41
Q29. On average, how much money do you normally
borrow when you get a payday loan? (ENTER DOLLAR
AMOUNT ONLY. NO CENTS)
15
Payday Loan Payments

• Four-in-five (83) respondent payday loan
  customers in Saskatchewan report that they paid
  all the loans they received in the past back on
  time, while 11 indicate that they paid most of
  the loans back on time.

Q30. 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?
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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 (81), with their understanding of the
  terms of their payday loan and when payment on
  the loan was due (75), and with their overall
  customer service experience (81).

Mean 8.1 8.0 8.0 5.8
The way you were treated by the customer service
representative who provided your loan Your
understanding of the terms of the loan and when
payment on the loan was due The overall customer
service experience The total cost of the payday
loan, including interest and administration fees
VerySatisfied (10)
SomewhatSatisfied (7-9)
Neutral(4-6)
SomewhatDissatisfied (2-3)
VeryDissatisfied (1)
Q31-34. Thinking about all the payday loans you
received, please indicate your overall
satisfaction with each of the following
attributes. Please use a scale from 1 to 10 where
1 means you are very dissatisfied and 10 means
you are very satisfied. (READ AND ROTATE)
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Attributes of Financial Institutions

• Respondent payday loan customers rank payday loan
  providers higher than banks and credit unions
  regarding fast, long hours of operation,
  easy to use and convenient.
• A significantly higher proportion of payday loan
  customers think respectful to me, good
  service and good value best describes payday
  loan providers compared to credit unions.

Fast Long hours of operation Easy to
use Convenient Respectful to me Good service Good
value
CreditUnion
Bank
Dont Know/Refused
Payday LoanProvider
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)
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Payday Loans Related Issues

• Three-in-four (77) respondent payday loan
  customers agree that since credit cards can be
  used at any time, they should also be able to get
  a payday loan whenever they need it, as long as
  they repay the loan. A similar proportion think
  that since 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 loan providers (73).
  

Mean 8.0 8.0 3.3
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 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 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
StronglyAgree (10)
SomewhatAgree (7-9)
Neutral(4-6)
SomewhatDisagree (2-3)
DisagreeStrongly (1)
Dont Know/Refused
Q42-44. Im 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)
19
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