1. Payday Loan Customer Survey ~ New Brunswick & Nova Scotia ~ Presented to: Canadian Payday Loan Association October 2007

2. 1  The Canadian Payday Loan Association (CPLA) commissioned POLLARA to conduct a telephone survey of payday loan customers in New Brunswick and Nova Scotia to develop an understanding of payday loan customers’ perceptions of the payday loan industry.  The CPLA represents 23 companies with 501 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, 5,836 records were used for this study.  POLLARA conducted a total of 400 telephone interviews with payday loan customers in New Brunswick and Nova Scotia between August 18 th and August 29 th, 2007, resulting in an overall margin of error of plus or minus 4.9%, nineteen times out of twenty. Methodology

3. 2 Profile of Respondent Payday Loan Customers in New Brunswick and Nova Scotia  The average age of a respondent payday loan customers in New Brunswick and Nova Scotia is 39 years.  The vast majority are employed full-time (76%).  The majority (59%) of respondent payday loan customers have a post-secondary education from community college (34%), university (18%) or post-graduate/professional programs (7%).  One-half (50%) are married, while 17% are separated or divorced, and 31% have never been married.  Respondent payday loan customers would expect to pay, on average, $28.04 for interest and administration fees to borrow $100 for two weeks.  On average, two-thirds (63%) of respondent payday loan customers normally borrow less than $300 when they get a payday loan.  The average amount of money that respondent payday loan customers in New Brunswick and Nova Scotia currently owe to financial institutions, excluding mortgages, is $23,149.  Respondent payday loan customers have household incomes generally on par with the general population of New Brunswick and Nova Scotia. 56% of the NS and NB residents report household incomes of less than $50,000 a year, compared to 51% of respondent payday loan customers. Key Findings

4. 3 Profile of Respondent Payday Loan Customers in New Brunswick and Nova Scotia (Continued)  Almost all respondent payday loan customers currently have a debit card (99%) and a chequing account at a bank or credit union (93%). At least half have a savings account at a bank or credit union (62%) or a major credit card (55%). Payday Loans Companies vs. Other Financial Institutions  Respondent payday loan customers rate their impressions of payday loan companies lower than other financial institutions, expect credit card companies (credit card companies receive an average impression rating of 5.4, while payday loan companies receive a rating of 5.8). Banks receive the highest average impression rating at 6.8.  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. The majority of respondents are aware of the approximate amount they pay for all fees, including administration fees and interest charges on their payday loans (67%), for their various bank accounts (70%) and credit cards (74%). Key Findings

5. 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 (55%), while about one-in-five say the most important reason for their acquiring a payday loan is that they have more convenient locations (18%).  Only 15% 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 (38%). One-in-three (30%) say they needed a payday loan to help with an unexpected expenses, like a car or household expense.  More than four-in-five (84%) respondent payday loan customers say they paid all of the loans that they received in the past back on time, while 13% said they paid most of their loans back on time. Satisfaction with Payday Loan Experience  On average, respondent payday loan customers rate their satisfaction with their understanding of the terms of their payday loan and when payment on the loan was due at 8.8 out of 10.  Also rated high is satisfaction with the way they were treated by the customer service representative who provided the loan (8.9) and the overall customer service experience (8.6).  Respondent payday loan customers rate payday loan providers higher than banks and credit unions regarding ‘long hours of operation’, ‘fast’, ‘convenient’, ‘easy to use’, ‘good service’, and ‘respectful to me’. Additionally, customers rate payday loan providers higher than credit unions concerning ‘good value’. Key Findings

6. 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 Credit Unions Home And Car Insurance Companies Payday Loan Companies Credit Card Companies Mean: 6.8 6.2 5.8 5.4 Very Favourable (10) Somewhat Favourable (7-9) Neutral (4-6) Not Very Favourable (2-3) Don’t Know/ Refused Not At All Favourable (1)  Although banks top the list (at 6.8), respondent payday loan customers in New Brunswick and Nova Scotia do not have a strong favourable impression of the various credit providers mentioned.  Respondent payday loan customers give credit card companies a lower impression rating than payday loan companies (5.4 compared to 5.8, respectively).

7. 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 personal loan with a bank or credit union A car loan A line of credit YesNoDon’t Know/Refused  All survey participants have, at some point, been payday loan customers.  More than three-in-five respondent payday loan customers in New Brunswick and Nova Scotia have a personal loan with a bank or credit union (65%), or a car loan (62%).

8. 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 home mortgage A retail credit card, such as a Canadian Tire Card, Sears Card, or a Gas Card YesNoDon’t Know/Refused  The vast majority of respondent payday loan customers have a debit card (99%) and a chequing account at a bank or credit union (93%).

9. 8 Satisfaction with Financial Services and 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 Overdraft protection at your bank Home mortgage Chequing account at a bank or credit union Savings account at a bank or credit union Car loan Line of credit Credit card Personal loan with bank or credit union Retail credit card Payday loan Mean: 8.6 8.0 7.8 7.2 7.0 6.8 7.1 6.4 6.1 Satisfied (7-10) Neutral (4-6) Somewhat Dissatisfied (2-3) Very Dissatisfied (1)  Respondent payday loan customers in New Brunswick and Nova Scotia are most likely to express satisfaction with their debit card (providing an average rating of 8.6 out of 10).  In contrast, satisfaction with a payday loan is rated slightly lower than credit cards (6.1, compared to 6.4, respectively).

10. 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 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 (76%), major credit cards (74%), savings and chequing accounts (70%), and payday loans (67%).

11. 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 Get A Cash Advance From Credit Card Do Without/Wait Until Payday Borrow From A Friend Use Bank Over-Draft Protection/Line Of Credit Withdraw Money From Savings Account/Other Investments No Need/Never Short Of Cash Borrow From An Employer Other Don’t Know/Refused  Two-thirds (63%) of respondent payday loan customers in New Brunswick and Nova Scotia say they would use a payday advance or payroll loan company if they needed $300 a few days before their next payday.  One-quarter (24%) say they would borrow the money from a family member.

12. 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 A More Convenient Location No Other Alternative Source For Borrowing Discipline Of A Short Term Or Revolving Debt Forces Me To Pay It Back More Quickly Necessity/Needed it in an Emergency Bad Credit/No Credit Check Less Expensive Than Other Sources Borrowing Cash Greater Privacy Less Harm To My Credit Other Don’t Know/Refused  The majority (55%) of respondent payday loan customers feel the most important reason for choosing to obtain a payday loan in the past rather than using another source of financing was because it is a quick and easy process.  Only 15% of respondent payday loan customers feel they use payday loan because they have no other alternative source for borrowing.

13. 12 Reasons Payday Loans are 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 Car Or Household Repair To Help Avoid Late Charges On Routine Bills To Help Get Through Temporary Reduction In Income To Avoid Bouncing Cheques To Buy Something You Wanted Other Don’t Know/Refused  Two-in-five (38%) respondent payday loan customers in New Brunswick and Nova Scotia report the main reason why they needed a payday loan was for emergency cash to pay for necessities.

14. 13 Amount Normally Borrowed with Payday Loan Q30.On average, how much money do you normally borrow when you get a payday loan? (ENTER DOLLAR AMOUNT ONLY. NO CENTS) Mean: $312.60  On average, two-thirds (63%) of respondent payday loan customers normally borrow less than $300 when they get a payday loan.

15. 14 Payday Loan Payments Q31.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?  More than four-in-five (85%) respondent payday loan customers in New Brunswick and Nova Scotia report they paid all the loans they received in the past back on time.

16. 15 Satisfaction with Payday Loan Experience Q32-35.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? 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: 8.9 8.8 8.6 6.3 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 (93%) and the their understanding of the terms of the loan and when payment on the loan was due (88%).

17. 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) Long hours of operation Fast Convenient Easy to use Good service Respectful to me Good value Payday Loan Provider Credit Union BankDon’t Know/ Refused  Respondent payday loan customers rate payday loan providers higher than banks and credit unions regarding ‘long hours of operation’, ‘fast’, ‘convenient’, ‘easy to use’, ‘good service’, and ‘respectful to me’. Also, respondents rate payday loan providers higher than credit unions concerning ‘good value’.

18. 17 Payday Loans & Related Issues Q43-45.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 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 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 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: 8.3 8.1 2.6 Strongly Agree (10) Somewhat Agree (7-9) Neutral (4-6) Somewhat Disagree (2-3) Disagree Strongly (1) Don’t Know/ Refused  Eight-in-ten (80%) respondent payday loan customers agree that since 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.  Two-thirds (65%) of respondent payday loan customers strongly disagree that a payday loan provider should be able to share your personal financial information with other lenders, banks, and credit unions.

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