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New Payday Loan Industry Survey Results available. 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:
(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 following conclusions. These HIGHLIGHTS are insightful as there are some surprising conclusions to be drawn from their results. SURVEY RESULTS (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 When asked for top of mind reasons for choosing a payday loan instead of another form of lending, users say it is a last resort (41%). Convenience factors represent other motivators for obtaining payday loans; for example, that it is easy to apply (12%), faster to get the loan (10%) and the location is convenient (6%). However, when asked to rate the importance of a number of specific aspects of payday loans, users rate speed, ability to borrow a small amount, hours of operation, convenient location, and ease of applying for the loan substantially more important (87-92% important ratings) than being the only place they are confident to apply (61%) or not being approved at other places (44%). (A number of other studies of our industry have consistently pointed out the same thing; IT"S ABOUT CONVENIENCE!)STIGMA INTERNET PAYDAY LOANS A low percentage of users obtain their loans through the Internet (3%). Almost all users obtain their loans from a payday loan store, usually somewhat or very close to their home. Most users (82%) have Internet access, at about the same incidence as the general population (84%). (OUR THOUGHTS: Only 3% of payday loan users have used the Internet to get a payday loan and yet 25% of users admit to being concerned about being seen in a payday loan store. This is further evidence that those of us offering payday loans should implement the Internet for our product offerings and, we suspect, strive harder to deliver peace of mind to those payday loan consumers contemplating the use of the Internet to get a loan.) ********************************************************************Newsletter continued below ****************************************************************Read a few of our previous Newsletters here if you missed them. The focus of our last few Newsletters was : FOCUS GROUPS
******************Our Sponsors**************************************** Characteristics of Payday Loan Users Use of Payday Loans (The potential for HUGE growth remains for the payday loan product.) The vast majority (93%) of non-users rate themselves unlikely to consider a payday loan. Supporting this view, most Albertans would not need a payday loan if they needed $300 in cash, as they tend to have access to funds from their bank accounts, relatives, lines of credit, overdraft protection and cash advances. Non users are more confident than users about being able to obtain the funds they need through their bank account or through a line of credit, while users and non users demonstrate similar levels of confidence about getting the required funds from other sources. Albertans who have had a payday loan before tend to be repeat users (79%), using payday loans an average of four times in the past. However, only 22% anticipate using payday loans again in the future. Users perceive that they pay their loans off as soon as they are due (80%) and only use payday loans as a last resort (62%). Some users see themselves using payday loans at certain times of year (20%) and 10% use payday loans as part of their regular banking. Payday loans most frequently involve obtaining between $200 and $499 (52% of users’ most recent loan value), and the amount is almost always under $1,000 (88%). Payday Loan Agreements (We would bet the percentage of payday loan consumers who actually read their contract EXCEEDS those homebuyers who read their loan new documents!) MAXIMUM RATES Consumers Credit counselling agencies are also in favour of a tiered system. "These loan schemes take advantage of those least able to afford it," says an outreach program for street people. "If indeed the service is required, then it needs to be better controlled – it is a circle whereby one never gets the loan paid off." The Industry One payday lender says it opposes interest and fee limits because the current level of competition in the market is healthy and the "normal range" of rates charged in Alberta is consistent with those charged in other provinces. "We believe that a market-based approach to rate-setting is the most effective way of setting rate caps." Another industry stakeholder did not say in the discussion paper what rate it would like to see the maximum set at, it charges interest and fees of as high as $41.50 per $100 based on information received by regulators or disclosed in writing on disclosure statements to borrowers. In 2006, an Edmonton television journalist posing as a first time borrower reported he was charged $52.70 per $100. The stakeholder would like to see the government set a maximum fee as a percentage of the loan, i.e.: $23 per $100 lent. While it does not disclose what rate cap it would like to see set, the $23 figure is consistent with figures it has said publicly that it would like to see charged. Several small payday lenders said they would like to see the maximum set between $30 and $35. The payday loan business respondents are unanimous in their desire for some form of industry regulation, and almost universally in favour of creating this with federally approved legislation. The sole exception is one payday lender in a small Alberta city that prefers regulation without federally approved legislation. Read the entire report here: Subscribe at no cost to you for our Payday Loan Newsletter. The frequency is typically once each month. If
you have an interest in the payday loan industry, YOU NEED OUR Payday Loan NEWSLETTER! And please forward our Newsletter to journalists, regulators, legislators and anyone else interested in helping consumers to maintain choice in the financial products they have access to! The Payday Loan Guys, ********************************************************************Our new Payday Loan Industry Blog: OK, time to go.......... See you all next month. And remember, "Make Money Payday Loan Fans". If you thirst for more payday loan knowledge, go here: This information is discussed further in depth in our Payday Loan Startup & Training Manual. You may ORDER it NOW. Next Month a new topic and coverage of more states. From: Trihouse Enterprises, Inc. If you have comments, questions, topics you would like covered...PLEASE contact: |
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