For many British Columbians, a payday loan is quickly becoming an essential service rather than a last resort.

A new report by Vancity says that British Columbians are using payday loans at an increasingly higher rate than other provinces. Between 2012 and 2014, the number of payday loan borrowers grew by 58 per cent. In the same time period, the payday loan industry grew from $318 million to $358 million.

What payday loans are being used for

Linda Morris, senior vice-president of Vancity, says the majority of payday loan borrowers are members of the working poor, employed but living under the poverty line. And the borrowers are middle aged, low-income, employed, somewhat indebted and have completed post-secondary education.

“They really are living paycheque to paycheque, and it doesn’t take much to push them off balance and need some support,” Morris says, adding that most of the time loans are for emergencies like a car breaking down. Tweet This

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She added that B.C. has the highest level of working adults in poverty, citing the expensive cost of living as one reason British Columbians are using payday loans more than other people in other provinces. The report also found that 21 per cent of borrowers said they used payday loans because they had no alternative.

A cycle of debt

For some people, the payday loan is part of a vicious cycle of debt. Morris says one of the most troubling statistics from the report was the number of people who had 15 or more payday loans increased by a shocking 604 per cent.

Morris says one loan quickly becomes two when a borrower borrows more money from a different lender to pay down the first loan.

“They are constantly paying one loan off, and then they are sinking deeper…it’s a very serious cycle of debt.” Tweet This

Potential solutions

While Morris doesn’t advocate a total ban on payday loans, she says we need alternatives, possibly from financial institutions and credit unions, who can also provide financial counselling. She also recommends that if borrowers use a payday loan, make sure the lender is licensed.

On a broader policy level, the report advocates a federal commission to better understand the payday lending industry. In addition, especially given B.C.’s lopsided usage, Morris adds “I do think there should be more standardization between the provinces so that there’s more of an even playing field.”

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