ACORN Canada Study Finds a Surge in the Usage of Installment Loans, and Growth in High-Interest Online Loans
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TORONTO, Feb. 17, 2021 (GLOBE NEWSWIRE) -- On Wednesday, February 17th, ACORN will be holding events in nine cities across the country releasing results from a nationwide survey and report to understand the experiences of consumers of high interest loans (Loans with interest rate from 25% - over 500%), especially when they are taken out online. The study findings are based on 376 survey responses.
We also conducted a legislative scan to map the extent to which there are protections for consumers of high-interest loans at the federal and provincial levels.
The recommendations from the study call on the Federal Government to mandate banks to create a national multi-jurisdictional anti predatory lending strategy to protect low-income and other vulnerable consumers from predatory lending practices and enhance their access to fair banking options. ACORN has been fighting for more than a decade to fight for fair banking at national, provincial and local levels.
Detailed report can be found here. The link will be live on February 17th 2021. https://acorncanada.org/resource/national-report-high-interest-loans
Pour le français, cliquez ici https://acorncanada.org/resource/etude-sur-les-prets-a-interet-eleve
ACORN members will be releasing the report on February 17th 2021.
|What:||ACORN leaders from across Canada will be targeting predatory lenders such as Money Mart, Easy Financial, Fairstone Financial etc. to demand lower interest rates.|
|When:||Wednesday February 17th|
|Where:||For local details https://acorncanada.org/civicrm/event/info?id=2661&reset=1|
Key highlights of the ACORN Canada 2020 report:
- 70% of respondents stated taking out a high interest loan.
- While a majority of consumers i.e. 70% continue to take payday loans, there is a surge in people taking installment loans. In 2016, the proportion of people taking out installment loans was 11% which has gone up to 45% in the latest study.
- Notably, the study points out that either people take these loans only once or they are caught in a vicious cycle of debt. While 30% of respondents reported taking these loans only once in the last 12 months, the second highest number of times reported was more than 10 times in a year by 13% of the respondents.
- To no surprise, 80% of respondents said that they took out a loan to meet everyday living expenses such as rent, groceries, hydro etc. 22% respondents mentioned that they took it out to improve their credit rating as they were promised it would help them do so.
- 45% said that they were rushed to sign the loan agreement with the lender.
- 12% respondents were never informed about optional products such as insurance until a large sum was debited from their account.
- Almost 30% stated that they took out an online loan. Reasons for taking a loan online was primarily because people found them convenient and quick.
- 17% said that they have not been able to make payments as they are facing a tough financial situation due to COVID. Only 7% found the lenders extremely considerate.
- 40% approached banks before they took out a high interest loan. and were denied. Only 3% said that they prefer a high interest loan.
- With regard to online loans in particular, the study shows that the nature of issues that affect these loans when taken from the storefront or online are broadly similar. However, there are certain specific issues that pertain only to online loans and hence it’s important that all consumer protections applied to storefront must apply to online loans as well.
Background: ACORN Canada is a national independent organization is an independent national organization of low-and-moderate income families with 140,000+ members in 20+ neighbourhood chapters across 9 cities.
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