The Financial Consumer Agency of Canada decided not to share the results of a new study about payday loan borrowers. This study was the first of its kind at the federal level. .According to Blacklock’s Reporter, it was conducted after a report on Feb. 13 revealed 38% of Canadians were taking out loans to pay for their everyday needs..“The Agency is currently analyzing the data collected,” said Léonie Laflamme-Savoie, spokesperson for the Agency. .“It plans to make the research publicly available later this year.”.On July 17, the research, High-Cost Credit Users, involved asking detailed questions to 2,307 Canadians from across the country who borrowed money from alternative lenders at high-interest rates..“Some of the more well-known alternative lenders in Canada include Cash Money, Money Mart, Easy Financial and Fairstone Financial,” said the questionnaire used by pollsters with Léger Marketing Inc..The Agency spent $95,356 on a research project focused on Canadian borrowers who use payday loans and high-interest lines of credit. This research is considered the most extensive study conducted on this topic..“The objective of this research was to support the Agency’s mandate by deepening its understanding from a consumer perspective of Canadians’ use, awareness, understanding and impressions of certain high-cost credit products,” wrote researchers..“The study included participants who had obtained products including payday loans, high-cost lines of credit and high-cost instalment loans in the past three years.”.“Many Canadians who lack access to conventional banking services, referred to as ‘underbanked,’ often have no choice but to seek out financial products and services from alternative finance providers,” wrote researchers..“These providers typically offer products or services with higher interest rates than those offered by retail banks or traditional financial institutions. As a result these Canadians end up paying significantly higher borrowing costs.”.A 2009 Government of Ontario study “challenged the picture painted by some members of the industry that payday loan borrowers are ‘average Canadians,’” estimating typical customers were 39 years-of-age, renters, working full-time for low pay and largely unaware of their borrowing costs. .According to the survey, about 37% of people believed they were paying the same or even less interest on their loans than using a credit card..The report Capping Borrowing Costs: A Balanced Approach to Payday Loans in Ontario stated payday lenders made an average profit of 7%. The costs of loans were around 22% due to the expenses associated with running physical stores..Additionally, approximately 4% of loans were not repaid on time..The Financial Consumer Agency in a Feb. 13 report Consumer Vulnerability: Evidence From the Monthly COVID-19 Financial Well-Being Survey said 38% of Canadians “borrowed money to cover daily expenses” including food and shelter. About 5% of Canadians used payday loans, it said..The results showed that 41% of Canadians do not have any savings to pay for unexpected expenses such as car repairs..Thirty-one percent “said they were short on money at the end of the month,” said Vulnerability.
The Financial Consumer Agency of Canada decided not to share the results of a new study about payday loan borrowers. This study was the first of its kind at the federal level. .According to Blacklock’s Reporter, it was conducted after a report on Feb. 13 revealed 38% of Canadians were taking out loans to pay for their everyday needs..“The Agency is currently analyzing the data collected,” said Léonie Laflamme-Savoie, spokesperson for the Agency. .“It plans to make the research publicly available later this year.”.On July 17, the research, High-Cost Credit Users, involved asking detailed questions to 2,307 Canadians from across the country who borrowed money from alternative lenders at high-interest rates..“Some of the more well-known alternative lenders in Canada include Cash Money, Money Mart, Easy Financial and Fairstone Financial,” said the questionnaire used by pollsters with Léger Marketing Inc..The Agency spent $95,356 on a research project focused on Canadian borrowers who use payday loans and high-interest lines of credit. This research is considered the most extensive study conducted on this topic..“The objective of this research was to support the Agency’s mandate by deepening its understanding from a consumer perspective of Canadians’ use, awareness, understanding and impressions of certain high-cost credit products,” wrote researchers..“The study included participants who had obtained products including payday loans, high-cost lines of credit and high-cost instalment loans in the past three years.”.“Many Canadians who lack access to conventional banking services, referred to as ‘underbanked,’ often have no choice but to seek out financial products and services from alternative finance providers,” wrote researchers..“These providers typically offer products or services with higher interest rates than those offered by retail banks or traditional financial institutions. As a result these Canadians end up paying significantly higher borrowing costs.”.A 2009 Government of Ontario study “challenged the picture painted by some members of the industry that payday loan borrowers are ‘average Canadians,’” estimating typical customers were 39 years-of-age, renters, working full-time for low pay and largely unaware of their borrowing costs. .According to the survey, about 37% of people believed they were paying the same or even less interest on their loans than using a credit card..The report Capping Borrowing Costs: A Balanced Approach to Payday Loans in Ontario stated payday lenders made an average profit of 7%. The costs of loans were around 22% due to the expenses associated with running physical stores..Additionally, approximately 4% of loans were not repaid on time..The Financial Consumer Agency in a Feb. 13 report Consumer Vulnerability: Evidence From the Monthly COVID-19 Financial Well-Being Survey said 38% of Canadians “borrowed money to cover daily expenses” including food and shelter. About 5% of Canadians used payday loans, it said..The results showed that 41% of Canadians do not have any savings to pay for unexpected expenses such as car repairs..Thirty-one percent “said they were short on money at the end of the month,” said Vulnerability.
