The number of payday loan among heavily indebted Ontario citizens continues to escalate and reached historical high levels. According to the latest research about 31% of the citizens in the province used fast payday loans in 2017, increasing from 27% in 2016.
The report shows the sixth consecutive year-over-year increase. The insolvent borrowers are now 2.6 times more likely to have at least one payday loan or auto title loans outstanding when they file a bankruptcy or consumer proposal than in 2011. The are taking out fewer, but larger loans according to the updated research.
The average payday loan size in 2017 is 1,095 USD, an increase of 12.4% from 974 USD in 2016. About 9% of the loans are even above 2,500 USD, increasing from 6% in 2016.
The credits are characterized with high-cost and longer terms. The average insolvent borrower in Ontario owes 3,464 USD in payday loans, or 1.34 USD for every dollar of monthly take-home pay.
Meanwhile, a new report from a public policy think tank is giving Ontario an “F” for capping interest rates at payday loan companies as of January 1st.
Many Canadians are challenged to save, with 47% of citizens say they don’t contribute at all to RRSPs or TFSAs. According to the survey, only 33% of Canadians plan to contribute to an RRSP before the deadline. And only 37% of Canadians plan to contribute to a TFSA this year.