The Canadian Payday Loan Association (CPLA) commissione

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Payday Loan Customer Survey New Brunswick
Nova Scotia
Presented to Canadian Payday Loan Association
October 2007
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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.

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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.

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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).

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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 (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.

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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 6.8 6.2 6.2 5.8 5.4
Banks Credit Unions Home And Car Insurance
Companies 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)
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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 A personal loan with a bankor
credit union A car loan 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

• 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 bankor
credit union A savings account at a bankor
credit union A major credit card, such as VISA,
MasterCard, AMEX Overdraft protection at your
bank A home mortgage A retail credit card, such
as a Canadian Tire Card, Sears Card, or a Gas Card
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 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 8.6 8.0 8.0 8.0 7.8 7.2 7.0 6.8 7.1 6.4 6.1
Debit card Overdraft protection at your bank Home
mortgage Chequing account at a bank or credit
union Savings account at a bank or credit
union Car loan Line of credit Credit
card Personal loan with bank or credit
union Retail credit card 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 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 Your
savings or chequing account at a 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-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
Borrow From A Family Member Get A Cash Advance
From Credit Card Do Without/Wait Until Payday
Borrow From A Friend Use Bank Over-Draft
Protection/Line Of Credit Withdraw Money From
SavingsAccount/Other Investments No Need/Never
Short Of Cash Borrow From An Employer 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

• 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 A More Convenient Location
No Other Alternative Source For
Borrowing Discipline Of A Short Term Or Revolving
DebtForces Me To Pay It Back More Quickly
Necessity/Needed it in an Emergency Bad
Credit/No Credit Check Less Expensive Than Other
Sources Borrowing Cash Greater Privacy Less Harm
To My Credit 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?)
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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 To
Help Out With An Unexpected Expense,Like A Car
Or Household Repair To Help Avoid Late Charges
On Routine Bills To Help Get Through Temporary
Reduction In Income To Avoid Bouncing Cheques
To Buy Something You Wanted Other 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, two-thirds (63) of respondent payday
  loan customers normally borrow less than 300
  when they get a payday loan.

Mean 312.60
Q30. 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

• 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.

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?
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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 (93) and the their understanding of
  the terms of the loan and when payment on the
  loan was due (88).

Mean 8.9 8.8 8.6 6.3
The way you were treated by the customer service
representative who provided your loan Your
understanding of the terms of the loanand 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)
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?
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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 Fast Convenient Easy to
use Good service Respectful to me 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

• 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 8.3 8.1 2.6
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
StronglyAgree (10)
SomewhatAgree (7-9)
Neutral(4-6)
SomewhatDisagree (2-3)
DisagreeStrongly (1)
Dont Know/Refused
Q43-45. 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)
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