A statistical profile of payday loan clients from national surveys

Abstract

Concern about the impact of payday lending concentrates on the clients, but who are they? This chapter provides a statistical portrait based on reputable Statistics Canada surveys that allow us to consider both the characteristics of payday loan clients in comparison with non-clients and how those characteristics have changed over time. While the view of payday loan clients as a financially vulnerable population is consistent with our results to a certain extent, the survey evidence suggests caution in taking this portrayal too far. Net worth appears to be more important than income in determining who uses payday loan services. We also find an increasing reliance of clients, especially repeat borrowers, on sources of income other than wages and salaries, particularly social assistance, public retirement income, and other transfer income. Education remains a factor associated with a reduction in the incidence and frequency of payday loan borrowing, suggesting a potential role for financial literacy in payday loan borrowing.