Alberta saw over 100,000 fewer payday loans during pandemic



Earlier this summer, the Alberta government released data for payday loans conducted in the province last year.

I thought it’d go through the data but decided that before I did that, I should check for past data. I did find payday loan data for 2017, 2018 and 2019 as well, but nothing prior to that.

In 2016, the Act to End Predatory Lending received royal assent in Alberta, and section 4 required the government to prepare an annual report on payday loans in the province, starting in 2018. The 2017 report was presented in August 2018.

There were 21 licenced payday loan businesses in Alberta in 2017. That number dropped to 16 in 2018, then 15 in 2019, where it stayed last year, as well.

During the first 3 years, the total number of payday loans in the province hovered between around 410,000 and 420,000. Then there was a significant drop of 123,553 last year, or about 30%.

The total value of those payday loans also dropped off last year, despite increasing the previous two year. Total value dropped by about $87.7 million, or 28.5%.

However, when we look at the average value per loan, we don’t see the same drop:

In fact, the average value per loan increased every year, jumping over $80 per loan by 2020.

Another number that dropped in 2020 was the total number of borrowers, which decreased by nearly 19,000 from 2019 levels. The drop between 2017 and 2018, by comparison, was barely under 5,000, about a quarter the drop that Alberta saw last year.

Given that both the total loans and the total borrowers dropped, however, the number of loans per borrower didn’t drop significantly, down only 0.53 loans per borrower from last year and 0.49 loans per the average of the 3 previous years.

And given that there were fewer borrowers and fewer loans, there were also fewer payday loans that ended up being written off.

2017201820192020
# of loans written off22,88616,65714,90111,838
Total value$12.6 M$8.8 M$8.2 M$6.7 M
Average value per loan$550.29$526.79$553.06$563.78
Portion of total loans5.46%4.07%3.62%4.10%

The number of loans written off did indeed drop last year, but that number was dropping every year. What’s interesting is that in 2018 and 2019, the percentage of total loans that ended up being written off kept dropping, but 2020 saw slight increase in write offs for some reason.

Defaulted loans saw a similar story.

2017201820192020
# of defaulted loans65,84759,35058,85942,678
Total value$26.8 M$25.1 M$26.4 M$19.2 M
Average value per loan$407.48$423.10$449.09$449.56
Portion of total loans15.70%14.49%14.29%14.80%

Fewer defaulted loans, but a slight increase in the portion of the total loans.

Finally, here’s a snapshot of how the loans break down by the value of each loan:

2017201820192020
$1–49940.39%37.76%36.38%34.61%
$500–99934.55%32.68%32.89%32.62%
$1,000–1,50025.06%29.56%30.73%32.76%

When data started being collected in 2017, the smaller loans—anything under $500—made up the largest share of the 3 groups. The numbers have since stabilized.

Here’s a look at the data in a graph:

Now that pandemic benefits are ending soon, it’ll be interesting to see how the numbers look over the next year or two if unemployed and underemployed people have much less dependable sources of income coming in.

This content was originally published here.