How to save for a payday loan
B.C.’s payday loan industry has become an epicenter for scams and misinformation, but a new survey has shown that consumers are getting a good deal on these loans.
The study from the B.S.C. Mortgage Branch, an independent consumer lender, surveyed a national sample of 2,079 consumers and found that payday lenders in B.F.C., Saskatchewan, Prince Edward Island and Nova Scotia are among the most trusted lenders.
It found that consumers have more confidence in payday lenders, but not in the borrowers they’re lending money to.
“Payday loan borrowers have been known to get their money back at the end of a loan, and the same thing happens to those who take out loans in the name of the bank,” said the study’s executive director, Dan Hirsch.
“This makes the loan that much more risky.”
Hirsch says payday loans are still a niche industry in the B,S.E.,N.B., and Ont.
regions, but they’re growing in popularity.
“People are using them for everything from emergencies to short-term borrowing, so they’re certainly not something that you would see everyday,” he said.
The B.B.M.L.S.’s survey found that 57 per cent of payday loan borrowers are using the business for short- or medium-term loans, and 58 per cent are doing so for long-term.
Payday loans are popular among younger consumers and those with higher incomes, who often take out them to pay bills and get cash in the mail.
Hirsch said the lenders are generally a bit different from other lending companies, like credit unions and auto loans.
“There’s no difference between payday lenders and credit unions.
There’s no distinction between a payday lender and a credit union,” he says.”
They have different rules and regulations, so there’s not really much of a difference.”
Holly Hutton, executive director of the BCBMs Consumer Services and Consumer Protection Branch, says the payday loan sector is growing fast in the province.
She says the industry is experiencing a boom in popularity and it’s important that consumers know what they’re buying.
“We want to make sure that people understand the risks and the pros and cons of the loans, but also the advantages and cons,” Hutton said.
“It’s a big deal when you’re making money from a loan.”
Hutton says lenders offer loans ranging from a few hundred dollars to up to $500,000.
She said that in the past few years, the industry has expanded to offer loans with longer term and lower interest rates, as well as a loan guarantee.
“We’re really excited about what the industry’s been able to accomplish, and we’re really looking forward to seeing what it does next.”