Discover Personal Loans, a division of Discover Financial Services (DFS DFSDiscover Financial Services66. 44-0.87% Created with Highstock 4. 2.6), commissioned by a study of Americans’ payday loan habits. The data, broken down by generation and financial health, yielded interesting information.
The Rasmussen Reports research agency asked 2, 000 adults about their financial health. The self-reported results showed that 58% of people think they have excellent or good overall financial health. About 30% self-reported fair financial health and the balance rated themselves poor or uncertain. (For related information, see: Five rules to improve your financial health .)
Of the respondents who had taken out a Payday loan, 60% consider themselves to be in good or excellent financial health. The survey also showed that 58% of people who had never purchased a Payday loan also considered themselves to be in good or excellent financial health. Interestingly, 49% of people who had doubts about having a Payday loan considered themselves to be in good or excellent financial health.
In terms of whether a respondent would take out another Payday loan, the results were consistent across the board – regardless of self-reported financial health, about 50% of people would take out another Payday loan.
Baby boomers and generation X were the most likely to have concluded loan with a payday loan with 54% and 49% respectively. Millennials had the least probability loan took out a payday loan with 36% of the respondents.
Regardless of the generation, the most important factor in choosing a lender was the interest rate. The reliability of the lender was the second most important factor for Generation X and Baby Boomers, while Millennials chose the loan amount. Costs and ease of application ranked poorly as factors when choosing a lender. (For more information, see Money Habits of the Millennials .)
Respondents also gave an insight into why they had taken out a Payday loan: 31% of the respondents obtained a Payday loan for a car purchase, 17% for medical expenses and 12% for home improvement. Debt consolidation and school fees were also popular reasons for taking out a Payday loan with holidays and weddings that completed the results.
The bottom line
The Discover Personal Loans survey revealed that older Americans have taken out loans in greater numbers than younger Americans. The majority of people who have taken out Payday loans would be interested in a new Payday loan in the future. The survey also reveals the differences in how different generations choose lenders with older generations who place greater trust in reliability than millennials do.