The Facts On PayDay Lending

Customer Demographics

Survey respondents possess the following demographical characteristics:

  • 62% of respondents are females
  • 62% of respondents have children under the age of 18 living at home Payday customers have an average age of 32
  • Payday customers have a median income of $35,000
  • 91% of respondents are high school graduates- 58% attended some college
  • 21% are college graduates
  • 50% rent their current dwelling
  • 65% have lived in their current residence for three years or less
  • 37% of respondents have held their current job for three years or more
  • 51% of respondents said that they voted in the most recent general election
  • 86% stated that they have family health insurance coverage

CUSTOMER MOTIVES FOR OBTAINING A CASH ADVANCE

  • During the prior 12 month period, payday customers obtained these forms of credit:
    • Car Loans (56%)
    • Home Mortgages (33%)
    • Car Title Loans (14%)
    • Home Equity Loans (5%)
  • 88% said that cash advance companies provide a useful service.
  • 67% of cash advance loans were used to pay an unexpected expense [including a temporary reduction in income (18%)]
  • Advanced payday loans were less frequently used for non-essential spending
  • Aging of cash advance loans:
    • New advance (54%)
    • Rollover from an existing advance (40%)
      • Outstanding for 2 weeks or less (47% of these)
      • Outstanding for 3-4 weeks (27% of these)
      • Outstanding for more than 1 month (20% of these)
  • 48% said they considered alternatives to payday loans:
    • Friends or relatives (40% of these)
    • Banks or savings and loans (34% of these)
  • Primary reason for choosing a cash advance loan:
    • Convenience (49%)
      • Quick & easy (23% of these)
      • Convenient location (14% of these)
      • Faster (10% of these)
      • Involved less paperwork (2% of these)
      • No other credit alternative (12%)
  • 54% said that the lack of collateral requirements influenced their selection of a cash advance
  • Customer satisfaction with cash advance loans:
    • Satisfied (67%)

CUSTOMER PERCEPTIONS OF VARIOUS BORROWING OPTIONS, INCLUDING CASH ADVANCES

  • Respondents paid monthly credit card balance:
    • Almost always (14%)
    • Sometimes (15%)
    • Hardly ever (46%)
  • 70% were turned down for other credit requests during the last five years.
  • 68% wanted to apply for credit but did not for fear of being turned down.
  • A majority believe that cash advance fees are less than or about the same as fees for:
    • Bouncing a check (59%)
    • Making late rent/mortgage payments (53%)
    • Making late credit card payments (54%)

Respondents were then asked their opinions of government intervention on aspects of the cash advance industry.

  • Government should not:
    • Limit the number of cash advances a customer can receive each year (76%)
    • Make it harder to get cash advances by limiting the number of consecutive cash advances (76%)