Who Uses Payday Loans In Canada? Statistics (2023) REVEALED!

When faced with a broken chimney or roof and having no savings, a payday loan in Canada may appear attractive to solve cash flow issues.

More Canadians are choosing payday loans to handle surprise expenses, urgent payments, and temporary financial needs. In 2021, the global payday loans market, valued at around $34.32 billion, grew due to a rise in payday lenders, per Vantage Market Research.

What the hack is a payday loan?

These loans are commonly called ‘fast loans,’ ‘cash loans,’ or ‘small amount loans,’ but are widely known as ‘payday loans.’ These loans are frequently used to handle emergencies, budget gaps, or even to repay other debts, indicating a challenging financial situation for borrowers.

Payday loans- In nutshell

• Payday loans are brief, unsecured cash loans for the working and non-working class. They cover immediate financial needs until the next paycheck arrives.
• Useful for urgent expenses: monthly bills, medical crises, school fees, quick home repairs, etc.
• No need for collateral or a guarantor.
• You can still get a payday loan even if you have bad credit or a low score.
• You usually have 7 to 60 days to repay, often by your next payday.
• Because of the high risk, the interest is quite steep, usually between 30% to 50%.
• Available online and offline.

Payday loans Canada statistics

Canada has seen a rise in payday loan demand due to the need for fast and convenient money access.

• A payday loan is a small, short-term loan (up to $1,500) from a non-traditional lender. It helps cover cash gaps until the next payday when the loan is due.
• Payday loan fees in Canada are capped as a percentage of the loan amount. It costs a maximum of $17 per $100, the same as APRs 442%.
• Small payday loans are typically repaid over a few weeks and have a maximum repayment period of up to 62 days.
• Only 43% of applicants understand that payday loans are more expensive than other alternatives.
• Approximately 45% of respondents used payday loans for unexpected but necessary expenses like car repairs, while 41% used them for anticipated expenses.
• The FCAC survey indicates that payday loans are mainly utilized by individuals with low-to-moderate incomes (over 50% lived in households earning less than $55,000 annually).
• In 2014, 4% of Canadian adults stated that their households used a payday loan the previous year, which increased from 2% in 2009.

Data Source: Canada.ca

Who uses payday loans in Canada most?

The Financial Consumer Agency of Canada‘s report shows more Canadians are turning to payday lenders. In 2009, 1.9% used payday loans, jumping to 4.3% in 2014. The market might hit $42.6 billion by 2028.

Payday lenders have become popular due to quick cash access without strict checks. They are willing to lend to borrowers with poor credit histories who may need help to repay loans.

People with lower income and less education talk about needing “emergency” money for necessities. Those with higher income and education often mention needing help with unexpected costs like car or kitchen repairs.

Why do Canadians use payday loans?

Users of payday loans are informed Canadians. They understand the costs and value the loans’ flexibility in dealing with sudden emergencies.

Most Canadians use family, credit cards, or lines of credit to borrow money. However, most users usually prefer Payday Loan lenders as their first choice.

Following are the reasons Canadians use payday loans:

49% of Payday Loan Users like the fast and straightforward process.

15% people value the convenient provider locations compared to other options.

21% used payday loans due to having no other choice.

41% of applicant applies for overdraft protection.

36% for needing cash advance for essential expenses.

24% for unexpected costs like car or household repairs.

4% used it for discretionary purchases.

Source: Environics.ca

Payday loans alternative in Canada

Safer alternatives to payday loans exist, reducing the threat of falling into a cycle of debt. Explore other options if you need more clarification about repaying a payday loan or need alternative finance.

0% APR Credit Cards

A 0% APR credit card means no interest on purchases or balance transfers for a set time. After that period, interest is charged to an unpaid balance.

Overdraft

For a short-term solution, consider extending your bank overdraft. Overdraft limits can help you manage your debt effectively. Even without an agreed limit, overdraft fees are usually lower than payday lender charges.

Credit Union Loan

Credit unions provide affordable loans, even for applicants with poor credit histories. They may offer loans without a credit check if you demonstrate the ability to repay. Eligibility usually depends on meeting specific criteria, often tied to a local area, occupation, or employer.

Peer-to-peer (P2P)

Peer-to-peer (P2P) websites are like marketplaces. They connect lenders with borrowers, skipping banks. People or businesses lend money to those who need it, making borrowing easier without traditional institutions.

Guarantor loan

If you have a poor credit history, a guarantor loan lets you borrow if someone with good credit co-signs as a guarantor. They promise to pay if you can’t. Although, these loans could stress your bonding and carry high interest rates. Even then, you can save from the debt cycle.

Why not use PaydayMart to access payday loan in Canada?

Getting a loan from traditional banks and lenders might take time and effort to get approval for various reasons, like bad credit. If you repeatedly face rejection for bank loans, try payday loans in Canada from PaydayMart.

Use your internet-enabled smart device like a mobile phone or laptop and complete an online application form. Once your loan is approved, you can get your money needed within 5 minutes through e-Transfer®.

Apply Now