Payday Loan Customer Survey ~ Saskatchewan ~ Presented to: Canadian Payday Loan Association September 2007

1  The Canadian Payday Loan Association (CPLA) commissioned POLLARA to conduct a telephone survey of payday loan customers in Saskatchewan to develop an understanding of payday loan customers’ perceptions of the payday loan industry.  The CPLA represents 23 companies with 484 retail financial services outlets across Canada. Member companies service nearly 2 million Canadians a year by providing short term loans in small amounts to help cover unanticipated expenses.  Lists of payday loan customers were provided by CPLA members. In total, 8,212 records were used for this study.  POLLARA conducted a total of 400 telephone interviews with payday loan customers in Saskatchewan between August 27 th and September 12 th, 2007, resulting in an overall margin of error of plus or minus 4.9%, nineteen time out of twenty. Methodology

2 Profile of Respondent Payday Loan Customers in Saskatchewan  The average age of respondent payday loan customers in Saskatchewan is 38 years.  The vast majority are employed full-time (71%).  About one-half (53%) of respondent payday loan customers have a post-secondary education from community college (31%), university (19%) or post-graduate/professional programs (2%).  On average, more than two-thirds (69%) of respondent payday loan customers normally borrow less than $300 when they get a payday loan, on average.  On average, customers in Saskatchewan borrow less than their counterparts in British Columbia ($381.14), Ontario ($349.53), New Brunswick and Nova Scotia ($312.61), and Manitoba ($300.05).  Respondent payday loan customers would expect to pay, on average, $22 for interest and administration fees to borrow $100 for two weeks.  The average amount of money that respondent payday loan customers in Saskatchewan currently owe to financial institutions, excluding mortgages, is $26,855.  About one-half (49%) are married, while 14% are separated or divorced and 30% have never been married.  Respondent payday loan customers have household incomes generally on par with the general Saskatchewan population. 53% of Saskatchewan residents report household incomes of less than $50,000 a year, compared to 49% of respondent payday loan customers. Key Findings

3 Profile of Respondent Payday Loan Customers in Saskatchewan (Continued)  Almost all respondent payday loan customers currently have a debit card (90%) and a chequing account at a bank or credit union (90%). Two-in-three (63%) have a savings account at a bank or credit union and 54% have a major credit card. Less than one-in-four (21%) payday loan customers in Saskatchewan currently have a home mortgage. Payday Loans Companies vs. Other Financial Institutions  Respondent payday loan customers provide payday loan companies with a similar average impression rating as credit unions; and a higher average rating than credit card companies (payday loans companies receive an average score of 6.2 and credit unions receive a score of 6.3 out of 10. Credit card companies receive the lowest average impression rating at 5.8).  Respondent payday loan customers in Saskatchewan provide payday loan providers with a higher average impression rating than their counterparts in British Columbia (6.1), New Brunswick and Nova Scotia (5.8), Ontario (5.5), and Manitoba (5.0).  There is no significant difference in awareness of the approximate amount of money payday loan customers pay for all fees for their loans with various financial institutions. A similar proportion of respondents are aware of the approximate amount they pay for all fees, including administration fees and interest charges on their payday loans (76%), for their various bank accounts (78%), credit cards (82%), and their home mortgage (85%). Key Findings

4 Why Payday Loans?  According to the majority of respondents, the attraction of payday loans has to do with the process being “quick and easy” (66%), while about two-in-five say the most important reason for their acquiring a payday loan is because of more convenient locations (20%).  Only 23% of respondent payday loan customers indicate that they use payday loans because they have no other alternative sources for borrowing.  The main reason for securing a payday loan, according to respondents, is that they needed money to pay for necessities (52%). One-in-four (23%) say they needed a payday loan to help with an unexpected expense, like a car or household expense.  Almost all respondent payday loan customers in Saskatchewan report that they paid all the loans they received in the past back on time (83%) or most of the loans back on time (11%). Satisfaction with Payday Loan Experience  On average, respondent payday loan customers rate their satisfaction with the customer service representative who provided their loan at 8.1 out of 10.  Also rated high is respondent satisfaction with their understanding of the terms of their payday loan and when payment on the loan was due (8.0), and satisfaction with their overall customer service experience (8.0).  The majority of respondent payday loan customers in Saskatchewan think “fast”, “long hours of operation”, “easy to use” and “convenient” best describe payday loan providers, compared to banks and credit unions. Additionally, a higher proportion of respondent payday loan customers think “respectful to me”, “good service” and “good value” best describes payday loan providers compared to credit unions. Key Findings

5 Impressions of Institutions Q3-7.I’d like to ask you some questions about different kinds of companies in Canada. Using a scale of 1 to 10, where one is “not at all favourable” and ten is “very favourable”, how would you rate your impression of each of the following groups of businesses in Canada? (READ AND ROTATE) Banks Home And Car Insurance Companies Credit Unions Payday Loan Companies Credit Card Companies Mean: Very Favourable (10) Somewhat Favourable (7-9) Neutral (4-6) Not Very Favourable (2-3) Don’t Know/ Refused Not At All Favourable (1)  Respondent payday loan customers provide payday loan companies with a similar average impression rating as credit unions; and a higher average rating than credit card companies (6.2, 6.3, and 5.8, respectively).

6 Financial Products or Services Ever Used Q2A-D.Which of the following financial products or services have you ever had or used in the past? (READ AND ROTATE LIST; ALLOW MULTIPLE MENTIONS) A payday loan A car loan A personal loan with a bank or credit union A line of credit YesNoDon’t Know/Refused  About one-in-two respondent payday loan customers have used a car loan (56%), a personal loan with a bank or a credit union (54%), or a line of credit (47%).

7 Financial Products or Services Currently Use Q8A-G.Which of the following financial products or services do you currently have? (READ AND ROTATE LIST; ALLOW MULTIPLE MENTIONS) A debit card A chequing account at a bank or credit union A savings account at a bank or credit union A major credit card, such as VISA, MasterCard, AMEX Overdraft protection at your bank A retail credit card, such as a Canadian Tire Card, Sears Card, or a Gas Card A home mortgage YesNoDon’t Know/Refused  Nine-in-ten respondent payday loan customers currently have a debit card and a chequing account at a bank or credit union (90%, respectively).

8 Satisfaction with Financial Services & Products Q9-19.Thinking about the following financial products or services overall, please tell me how satisfied are you with each product or service that you use? Please use a scale from one to ten where 1 means you are “very dissatisfied” and 10 means you are “very satisfied” with the product or service. (READ AND ROTATE) Debit card Chequing account at a bank or credit union Overdraft protection at your bank Savings account at a bank or credit union Home mortgage Personal loan with bank or credit union Credit card Retail credit card Line of credit Car loan Payday loan Mean: Satisfied (7-10) Neutral (4-6) Somewhat Dissatisfied (2-3) Very Dissatisfied (1)  Respondent payday loan customers in Saskatchewan are most likely to express satisfaction with their debit card (providing an average rating of 8.4 out of 10).  Satisfaction with payday loans is rated slightly lower (6.4) than the average score for retail credit cards (6.8).

9 Knowledge of Fee Payment Q20-23.Thinking about the various financial products that you hold, do you know the approximate amount that you pay for all fees, including administration fees and interest charges on...? (READ AND ROTATE; What about on...?) Your home mortgage Your major credit card Your savings or chequing account at a bank or credit union Your payday loan YesNoDon’t Know/Refused  The vast majority of respondent payday loan customers report that they are aware of the approximate amount that they pay for all fees, including administration fees and interest charges on their mortgages (85%), major credit cards (82%), savings and chequing accounts (78%), and payday loans (76%).

10 Solution to Short Term Financial Need Q25.If you needed, say, $300 a few days before your next payday, what would you do? (DO NOT READ; PROBE: “Is there anything else?”; ALLOW MULTIPLE MENTIONS) Use A Payday Advance Or Payroll Loan Company Borrow From A Family Member Do Without/Wait Until Payday Withdraw Money From Savings Account And Other Investments Borrow From A Friend Get A Cash Advance From Credit Card Use Bank Over-Draft Protection/Line Of Credit No Need/Never Short Of Cash Borrow From An Employer Payday Loan Other Don’t Know/Refused  Two-in-five (43%) respondent payday loan customers in Saskatchewan say that they would use a payday advance or payroll loan company if they needed $300 a few days before their next payday.  On-in-three (34%) say they would borrow the money from a family member (20%) or a friend (14%).

11 Reasons to Choose Payday Loan Q27.There are many reasons why people choose to obtain a payday loans instead of getting other financial products or services. What was the most important reason you chose to obtain a payday loan in the past rather than using another source of financing? (DO NOT READ LIST; PROBE: Any other reasons?) Quick And Easy Process No Other Alternative Source For Borrowing A More Convenient Location Discipline Of A Short Term Or No Revolving Debt Forces Me To Pay It Back More Quickly Less Harm To My Credit Less Expensive Than Other Sources Of Borrowing Cash Greater Privacy Necessity/Needed It/Emergency Other Don’t Know/Refused  Two-in-three respondent payday loan customers report that the most important reason for choosing to obtain a payday loan in the past, rather than using another source of credit was because it is a quick and easy process (66%).

12 Reasons Payday Loans is Needed Q28.Which of the following was the main reason why you needed a payday loan? (READ LIST) For ‘Emergency’ Cash To Pay For Necessities To Help Out With An Unexpected Expense, Like A Care Or Household Repair To Buy Something You Wanted To Help Avoid Late Charges On Routine Bills To Avoid Bouncing Cheques To Help Get Through A Temporary Reduction In Income All Of The Above Depends On Situation No Credit Don’t Know/Refused  One-in-two (52%) respondent payday loan customers in Saskatchewan report that the main reason why they needed a payday loan was because they needed emergency cash to pay for necessities.

13 Amount Normally Borrowed with Payday Loan Q29.On average, how much money do you normally borrow when you get a payday loan? (ENTER DOLLAR AMOUNT ONLY. NO CENTS) Mean: $  On average, more than two-thirds (69%) of respondent payday loan customers normally borrow less than $300 when they get a payday loan, on average.

14 Payday Loan Payments Q30.Thinking about all the payday loans you received in the past, did you pay back all, most, some, or none of the loans back on time?  Four-in-five (83%) respondent payday loan customers in Saskatchewan report that they paid all the loans they received in the past back on time, while 11% indicate that they paid most of the loans back on time.

15 Satisfaction with Payday Loan Experience Q31-34.Thinking about all the payday loans you received, please indicate your overall satisfaction with each of the following attributes. Please use a scale from 1 to 10 where 1 means you are “very dissatisfied” and 10 means you are “very satisfied”. (READ AND ROTATE) The way you were treated by the customer service representative who provided your loan Your understanding of the terms of the loan and when payment on the loan was due The overall customer service experience The total cost of the payday loan, including interest and administration fees Mean: Very Satisfied (10) Somewhat Satisfied (7-9) Neutral (4-6) Somewhat Dissatisfied (2-3) Very Dissatisfied (1)  The vast majority of respondents said they are satisfied with the way they were treated by the customer service representative who provided their loan (81%), with their understanding of the terms of their payday loan and when payment on the loan was due (75%), and with their overall customer service experience (81%).

16 Attributes of Financial Institutions Q35-41.(READ AND ASK ALL) Now I would like you to think about three types of companies that offer cash advances or loans, namely, banks, credit unions, and payday loan providers. I am going to read you a list of attributes that you might consider when getting a cash advance or short-term loan, and I would like you to tell me which of the three providers you think is best described by the attribute. (READ AND ROTATE) Fast Long hours of operation Easy to use Convenient Respectful to me Good service Good value Payday Loan Provider Credit Union BankDon’t Know/ Refused  Respondent payday loan customers rank payday loan providers higher than banks and credit unions regarding “fast”, “long hours of operation”, “easy to use” and “convenient”.  A significantly higher proportion of payday loan customers think “respectful to me”, “good service” and “good value” best describes payday loan providers compared to credit unions.

17 Payday Loans & Related Issues Q42-44.I’m going to read you a list of statements. For each, please indicate whether you agree or disagree, using a scale from one to ten where one means you “disagree strongly” and ten means you “agree strongly”. (READ AND ROTATE) Since credit cards can be used at any time, as long as the credit limit is not exceeded, you should also be allowed to get a payday loan whenever you need it, as long as you repay the loan Since the large banks may not provide short-term loans for small amounts, Canadians who need or want these services should have the option of obtaining them from payday loans providers If you take out a payday loan, the payday loan provider should be able to share your personal financial information with other lenders, banks and credit unions Mean: Strongly Agree (10) Somewhat Agree (7-9) Neutral (4-6) Somewhat Disagree (2-3) Disagree Strongly (1) Don’t Know/ Refused  Three-in-four (77%) respondent payday loan customers agree that since credit cards can be used at any time, they should also be able to get a payday loan whenever they need it, as long as they repay the loan. A similar proportion think that since banks may not provide short-term loans for small amounts, Canadians who need or want these services should have the option of obtaining them from payday loan providers (73%).

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