Why Consumers Borrow at 100%+ APR’s: Signature & Payday Loan Industry Survey Results

By: Jer and Miro. Payday Loan Industry Survey Results available.

Payday loan entrepreneur, do 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 counseling 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 can breathe. Government cannot legislate our product out of existence nor will the so-called “consumer protectionists” ever reach into their own pockets to help an anonymous consumer in need!)


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.


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
Users cite a range of situations of great need or emergency situations in general, as their reasons for needing payday loans. The most frequently mentioned reason for needing a payday loan is to pay bills or prevent overdue bills (40%).

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!)

There is a degree of stigma associated with payday loans, with 25% of users agreeing they would be concerned about being seen at a payday loan store.

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%). NOTE: In the USA, it’s 35% Internet & 65% storefront lending.

Remember – this is Canada. (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.” We know from our own operations that 48% of our borrowers apply via our websites!  Canada must be different? 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.)


Users believe that payday loans serve a need because they allow for emergency loans to consumers who cannot obtain alternative financing.
However, users and non-users alike are in favor of regulating the following areas to eliminate unfair or predatory practices:
  1. limit to the allowable cost of borrowing and, to a lesser extent,
  2. making agreements easier to understand,
  3. allowing a “cooling off” period during which the loan can be cancelled without penalty,
  4. allowing the borrower to repay only the principal amount borrowed if the business violates the regulations,
  5. the practice of “discounting,” and
  6. rollover loans.
Payday loan users acknowledged that they are under financial hardship and have poor budgeting skills. They also appeared to have little comprehension about the actual cost of borrowing from payday lenders when all of the rates and fees are converted to an annualized percentage rate.

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Characteristics of Payday Loan Users
The payday loan users participating in the survey demonstrated a higher than average likelihood to be between 25 and 35 years of age (35% vs. 18% of the Alberta general population) and a lower likelihood of being under 25 (6% vs. 14%) or 65 years and over (5% vs. 14%).
Reflecting their ages, 46% of users report having children in their household under 18 years of age, versus 39% in the general population. Users’ annual household incomes are below average, with 37% having incomes between $20,000 and $49,999 per year versus 23% for the general population.
Use of Payday Loans
The study estimates that 3% of Albertans have ever taken a payday loan. Another study provided an estimate of 6% based on a sample size of 900 respondents (+1.6 percentage points, 19 times out of 20).(Thus, the potential for HUGE growth remains for the small dollar 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
While almost all payday loan users (92%) report having received a copy of their payday loan agreement, only 66% read the loan agreement before signing.

(We would bet the percentage of payday loan consumers who actually read their contract EXCEEDS those home buyers who read their loan new documents!)


Most of the consumers and their advocates said they would prefer, for simplicity’s sake, to see the maximum rate set as a percentage or dollar amount of the loan. One exception is a senior citizens’ association. This association would like to see the government set a limit of $15 per $100 on the first $300 of the loan, $10 per $100 on the next $500 and $7.50 for any amount above that.

Credit counselling agencies are also in favor 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.”

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The Industry
Most payday loan businesses that responded to the public consultation are in favor of a regulated maximum rate.

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. An Edmonton television journalist posing as a first time borrower reported he was charged $52.70 per $100.
[Learn how to make money lending money to the masses! Your inventory? Cash; not flowers that wilt, fruit and vegetables that rot, merchandise that goes out of style… MONEY! Visit for details. Start a Loan Machine! We operate “Boot Camps” as well.]

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 favor 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.

Comments? Questions? Help? Suggestions?
Learn More at: Payday Loan University

CFPB: Colossal Upheaval Equals Tremendous Uplift in Payday Loan Industry

FLASH: Massive Upheaval at CFPB & the Monumental Future for the Payday Loan Industry

Jer Ayles

Jer Ayles

By: Jer Ayles. You’re aware of the dark cloud hanging over the payday loan industry since 2013

It was a BIG, REPULSIVE, FRIGHTFUL, NASTY cloud; a visible, billowing, dark mass of vapor hanging over the small dollar loan industry. [Think Elizabeth Warren.]

This cloud was given a name.

We know this cloud as “The CFPB” or “EW” for short.

“The Consumer Financial Protection Board.”

Well, guess what dear reader?

This blood sucking, murky, overcast, confused muddle IS GONE!


Rainbows, opportunity, sunshine and smiles all around!

A shindig for money lenders and consumers begins today!

As lenders, we can get back to our business of lending money to the masses enabling our clients to solve their financial challenges; fix their car, buy that refrigerator, get their prescriptions, invest in their school books and generally just get on with living.

President Trump appointed Mick Mulvaney as the new director of the CFPB.

The mission given to Director Mulvaney by President Trump? “TO FIX IT! To protect people without trampling on capitalism.” Without choking off access to financial services. Folks in the lower end of the middle classes…”

Director Mulvaney’s first words? “Regulators must protect people without choking lending. I won’t set the CFPB agency on fire, but it will change.”

Director Mulvaney added, “Anybody who thinks that the Trump administration CFPB will be the same as an Obama administration CFPB is simply being naïve.”

Both Director Mulvaney and President Trump “felt the CFPB under the previous administration had GONE TOO FAR…”

Mick Mulvaney, once called the Consumer Financial Protection Bureau the “worst kind” of government entity, vowed to keep the agency open while making changes that protect people without choking off capitalism.

“Elections have consequences at every agency, and that includes the CFPB,” Mulvaney said.

“Things are going to be different,” Mulvaney said.“I consider the CFPB to be part of the executive branch of government. That means that it is charged with executing the laws.”

All I can say Dear Reader is HALLELUJAH!!!!!!!!!!!!!!!

Here’s a link to Director Mulvaney speaking before reporters: LINK

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