Summary of AARP Poll of Louisianans Age 18+: Opinions on Payday Loan Rates and Legislation, November 2013 Prepared by Aisha Bonner, AARP Research A majority of Louisianans believe that it is important to strengthen consumer protection laws to prohibit excessive annual interest rates for payday loans. Additionally, Louisianans believe that the very high APR s (annual percentage rate) payday lenders in the state can charge consumers should be capped or limited. The 2013 AARP Louisiana Survey on Payday Lending was a phone survey fielded by RDD Inc. between October 2 and October 7, 2013 and yielded 600 completed interviews. The final sample was weighted by age and gender for adults age 18 and older residing in Louisiana. The margin of sampling error is +/-4.08%. KEY FINDINGS After hearing that payday lenders in Louisiana can currently charge up to 780 percent annual percentage rate (APR) most (60%) Louisianans age 18 and older support that the state law should be changed to prohibit annual interest rates above 36 percent. Moreover, the majority (64%) of Louisianans age 18 and older believe that government leaders in Louisiana should work to set limits or place caps on payday lending rates and fees. When asked to consider various annual percentage rates that payday lending businesses should be able to charge consumers (with the national average being 25 percent), most(69%) indicate an APR of less than 30 percent would be the highest rate these loan businesses should be able to charge. Less than one in eight feels that the payday lenders should charge an APR above 30 percent. Louisianans believe in the importance of strengthening consumer protections which would prevent excessive APR s for payday loans. Moreover, nearly six in ten (58%) Louisianans age 18 and older indicated that they would be more likely to vote for a state candidate who supports capping payday loan interest rates at 36 percent. Nearly the same amount (53%) would be more likely to vote for a state candidate who supports capping the number of loans an individual can borrow in a 12-month period. Louisiana Law Should be Changed to Cap Payday Loan APR s and Fees (n= 600 Louisiana Residents 18+) Highest APR of Payday Loans (n= 600 Louisiana Residents 18+) Likelihood of Voting for Candidate Who Supports Capping Payday Lending APR (N= 600 Louisiana Residents 18+) Louisiana law should cap payday lending rates Louisiana law should remain as is 26% 64% Less than 30 percent More than 30 percent 8% 69% Much more likely More likely Makes no difference in vote 27% 31% 16% Neither 5% Less likely 11% Don't know/not sure 5% Don't know/not sure 22% Much less likely Don't know/not sure 4% 10% Refused 1% Refused 2% Refused 1% 0% 20% 40% 60% 80%100% 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Summary of AARP Poll of Louisiana Age 18+ Opinions on Payday Loan Rates and Legislation, November 2013 Page 1
The majority of Louisianans age 18 and older are concerned with increasing consumer protections. Six in ten (60%) respondents support capping the number of payday loans an individual can take in a 12-month period. Nearly seven in ten of Louisianans 18 and older support requiring lenders to assess beyond having a regular income, the borrower s ability to repay the loan. Three- quarters of respondents support requiring payday lenders to give borrowers a minimum of 31 days before the loan is deemed overdue. Eight in ten of responding Louisianans support requiring that all fees be prominently and clearly displayed for consumers. After hearing that payday lenders have found loan products that circumvent the 2007 federal law that capped the APR of payday loans to active military personnel and their dependents at 36 percent, Louisianans age 18 and older show strong support for extending the same provisions to all loan products for active military and their dependents. In fact, nearly five in ten (57%) say they support the state of Louisiana capping all payday loans to active military personnel and their dependents at 36 percent. Additionally, 62 percent of survey respondents indicated that they were supportive of extending the 36 percent cap on all payday loan products to the members of the Louisiana National Guard, Reservist, and Veterans and their dependents. Demographics of Respondents (n=600) AGE 18-24 10% 24-39 17% 40-49 30% 50-64 25% 65+ 17% GENDER Male 48% Female 52% EDUCATION No HS diploma 9% HS diploma or GED 25% Post HS education, no degree 9% College degree 38% Post graduate study/degree 19% MARITAL STATUS Married/Living with partner 65% Divorced/separated 12% Widowed 9% Never married 14% RACE White/Caucasian 67% Black/AA 24% Other 9% Hispanic/Latino Yes 3% No 97% 0% 20% 40% 60% 80% 100% INCOME Less than/ = to $30k $30k - <$50k $50k - <$100k $100k - <$200k $200k or more WORK STATUS Employed FT Employed PT Retired Not working POLITICAL AFFILIATION Democrat Republican Independent Something else Not sure/refused POLITICAL VIEW Very conservative Somewhat conservative Moderate Somewhat liberal Very liberal AARP MEMBER Yes No MILITARY STATUS Active duty/nat. Guard Reservist Veteran Not in the military 4% 2% 2% 6% 23% 14% 20% 15% 9% 27% 16% 31% 28% 20% 12% 9% 20% 27% 18% 9% 9% 14% 48% 86% 91% 0% 20% 40% 60% 80% 100% Summary of AARP Poll of Louisiana Age 18+ Opinions on Payday Loan Rates and Legislation, November 2013 Page 2
METHODOLOGY Survey Administration This survey of Louisianans age 18 and older was commissioned by the AARP state office in Louisiana. This survey was fielded by RDD Field Services between October 2 and October 7, 2013 and yielded 600 completed interviews. The survey has a margin of error of +/- 4.08 percent. This means that if 95 out of 100 samples of this same size and population were given this same survey, the responses to the questions would fall within a range of plus or minus 4.08 percentage points of what would have been obtained if every Louisiana resident age 18 and older were asked these same questions. Sampling The sample for this survey was randomly drawn from the state of Louisiana. Respondents were screened to insure that they were residents of Louisiana and age 18 or older. Weighting The data was weighted to reflect the penetration and population of Louisianans age 18 and older as found in the 2010 U.S. Census by age and gender. Percents may not add to 100 percent due to rounding. Also due to rounding, the percents reported in the text may vary slightly from those in the annotation or in graphs. Response Rate/Cooperation Rate/Refusal Rate The response rate for this study was measured using AAPOR s response rate 3 method. The cooperation rate was measured using AAPOR s cooperation rate 3 method. The refusal rate was measured using AAPOR s refusal rate 3 method. The table below contains these rates: Response Rate Cooperation Rate Refusal Rate 6.56% 39.89% 18.2% AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 3
ANNOTATED QUESTIONNAIRE AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 4
LOUISIANA PAYDAY ON PAYDAY LENDING ANNOTATED QUESTIONNAIRE n=600 General Population 18+; Sample margin of error = ± percent INTRODUCTION/SCREENER Hello, this is calling from RDD, a national opinion research firm. We are not telemarketers and are not trying to sell you anything. A national organization would like to find out your opinions on some important issues. We are interested in your thoughts about how short-term loans are made to residents in Louisiana. Your views are important and we would greatly appreciate your participation. Your confidential responses will be summarized and shared. SCREENER QUESTIONS S1. Our study is interested in the opinions of certain age groups. Could you please tell me your age as of your last birthday? [IN YEARS] [RECORD ACTUAL AGE AND USE THE AGE GROUPS BELOW TO KEEP TRACK OF HOW MANY RESPONDENTS WE ARE GETTING IN EACH GROUP] 10% 18 24 years 17% 24 39 years 30% 40 49 years 25% 50 64 years 17% 65 + years - Under 18 years - Refused S2. And just to confirm, are you a resident of Louisiana? 100.0% Yes 0% No S2A. GENDER RECORD BY OBSERVATION 48% Male 52% Female AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 5
CONTEXT [READ] Payday loans are high interest, small dollar loans that are due in full on a borrower s next payday. Louisiana law allows payday lenders to charge borrowers annual interest rates up to 780% for a $350 loan. While some states mirror Louisiana s law, 36 other states do not allow lenders to charge annual interest rates above 36%. 1. Hearing this, which statement best represents your opinion: [PROGRAMMER: ROTATE a and b every other respondent] 64% Louisiana law should be changed to set limits or place caps on payday lending rates and fees 26% Louisiana law should remain as is and allow for the free market where payday lending businesses set their own rates and fees and consumers make their own financial decisions 5% Neither reflect my opinion [volunteered] 5% DON T KNOW / NOT SURE 1% REFUSED 2. The typical annual percentage rate for credit cards is 25%. Knowing this, what do you feel is the highest annual percentage rate that payday lending businesses should be able to charge consumers? 2% 0% 16% 1-10% 21% 11-20% 30% 21-30% 3% 31-40% 3% 41-50% 1% 51-100% 1% 700-1000% 22% DON T KNOW / NOT SURE 2% REFUSED 3. In 2007, the federal [INTERVIEWER EMPHASIS ON federal ] government passed a law that capped payday loans to active military personnel and their dependents at 36 annual percent rate. However, payday lenders have since created new loan products not covered by this federal law. Including payday loans with terms longer than 91 days; payday loans that are open-ended; and payday loans larger than $2,000 with rates and fees up to 500% or more. Do you support or oppose Louisiana capping all payday loans to active military personnel and their dependents at 36%? And is that strongly or somewhat support/oppose? 40% Strongly support 17% Somewhat support 4% Neither support nor oppose 8% Somewhat oppose 25% Strongly oppose 5% DON T KNOW / NOT SURE <.5% REFUSED AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 6
4. The federal government passed a law in 2007 that capped the annual interest rate of payday loans for active military personnel and their dependents at 36%. How strongly would you support or oppose expanding these rate caps to the Louisiana National Guard, Reservists, and Veterans and their dependents? Do you strongly or somewhat support/oppose? 47% Strongly support 15% Somewhat support 4% Neither support nor oppose 6% Somewhat oppose 24% Strongly oppose 4% DON T KNOW / NOT SURE <.5% REFUSED 5. Currently, Louisiana allows payday loan borrowers to refinance their loans at rates and fees up to 780% even if some borrowers may not be able to pay off the loan. If legislation was proposed to allow borrowers to refinance their loans only if they can pay 25% of the principal plus additional fees would you support or oppose this legislation? And would you strongly or somewhat support/oppose? 29% Strongly support 20% Somewhat support 4% Neither support nor oppose 11% Somewhat oppose 26% Strongly oppose 10% DON T KNOW / NOT SURE <.5% REFUSED 6. Would you be more likely to vote for a state candidate who supports capping payday loan interest rates at 36%? Are you much more likely, more likely, less likely, much less likely to support a candidate who supports capping payday lending or it makes no difference in your vote? 27% Much more likely 31% More likely 16% Makes no difference in vote 11% Less likely 10% Much less likely 4% DON T KNOW / NOT SURE 1% REFUSED AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 7
7. Would you be more likely to vote for a state candidate who supports capping the number of loans an individual can borrow in a 12-month period? Are you much more likely, more likely, less likely, much less likely to support a candidate who supports capping the number of annual loans or it makes no difference in your vote? 24% Much more likely 29% More likely 17% Makes no difference in vote 12% Less likely 10% Much less likely 7% DON T KNOW / NOT SURE 1% REFUSED 8. Do you support or oppose the following consumer protection measures for Louisianans who may receive a payday loan from a financial outlet? [INTERVIEWER READ: Now I d like hear your opinion about some consumer protection measures being considered in the state. PROGRAMMER: RANDOMIZE Q9a-e] Strongly support Somewhat support Somewhat oppose Strongly oppose Refused Neither support nor oppose Don t Know/ Not Sure a. Prohibiting annual interest rates above 36% for payday loans.... 48% 12% 6% 9% 22% 3% <0.5% b. Capping the number of payday loans an individual can take in a 12-month period.... 43% 18% 7% 12% 17% 3% 1% c. Requiring lenders to assess beyond having a regular income, the borrower s abilit to repay the loan.... 49% 20% 4% 8% 12% 6% 1% d. Requiring payday lenders to give borrowers a minimum of 31 days before the loan is deemed overdue.... 53% 22% 4% 6% 13% 2% 1% e. Requiring that all fees be prominently and clearly displayed for consumers.... 70% 13% 2% 4% 7% 4% <0.5% f. Requiring payday lenders to be separate businesses / not located inside other stores... 36% 19% 21% 8% 9% 6% 1% AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 8
9. Would you support or oppose legislation in Louisiana to eliminate payday lenders? Do you strongly or somewhat support/oppose? 35% Strongly support 10% Somewhat support 10% Neither support nor oppose 19% Somewhat oppose 21% Strongly oppose 5% DON T KNOW / NOT SURE <.5% REFUSED 10. How important do you think it is for Louisiana to strengthen consumer protection laws to prohibit excessive annual interest rates for payday loans? Is it extremely important, very important, somewhat important, not very important or not at all important? 46% Extremely important 28% Very important 15% Somewhat important 3% Not too important 6% Not at all important 2% DON T KNOW / NOT SURE <.5% REFUSED 11. As an alternative to payday loans, how strongly do you support or oppose creating a state managed small loan fund so that consumers can get small short-term loans at reasonable interest rates? Do you strongly or somewhat support/oppose? 49% Strongly support 2% Somewhat support 4% Neither support nor oppose 5% Somewhat oppose 20% Strongly oppose 2% DON T KNOW / NOT SURE 1% REFUSED 12. How strongly do you support or oppose requiring customers to take credit counseling courses in order to get loans from the small loan fund? Do you strongly or somewhat support/oppose? 45% Strongly support 21% Somewhat support 6% Neither support nor oppose 9% Somewhat oppose 15% Strongly oppose 4% DON T KNOW / NOT SURE 1% REFUSED AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 9
DEMOGRAPHICS 1 The following questions are for classification purposes only and will be kept entirely confidential. D1. What is your current marital status? 59% Married 6% Not married, living with partner 2% Separated 10% Divorced 9% Widowed 14% Never married D2. Are you or your spouse currently a member of AARP? 14% Yes 86% No D3. Besides you, do you have any of the following people living in your household? Yes No No Answer a. Child/children under 18... 34% 66% - b. Child/children 18 or older... 24% 76% - c. Child/children away at college... 18% 82% - D4. What is the highest level of education that you completed? 9% 0-12 th grade (no diploma) 25% High school graduate (or equivalent) 9% Post-high school education (no degree) 17% 2-year college degree 21% 4-year college degree 7% Post-graduate study (no degree) 12% Graduate or professional degree(s) 1 Demographic questions are numbered according to the larger AARP tracking survey. This numbering also corresponds with the variables in the data set. AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 10
D5. Which of the following best describes your current employment status? 3% Self-employed, part-time 8% Self-employed, full-time 6% Employed, part-time 40% Employed, full-time 27% Retired, not working at all 7% Not in labor force for other reasons 9% Unemployed, but looking for work D6. What is your current military service status? Are you <.5% Active duty 2% National Guard 2% Reservists [Active or inactive] 6% Veteran 91% Not in the military D7. Are you of Hispanic, Spanish, or Latino origin or descent? 3% Yes 97% No D8. What is your race? 67% White or Caucasian 24% Black or African American 1% American Indian or Alaska Native - Asian <.5% Native Hawaiian or other Pacific Islander 8% Other D9. Do you consider yourself to be a Democrat, a Republican, an Independent, or something else? [RANDOMIZE] 31% Democrat 28% Republican 20% Independent 12 Something else? 3% Not sure 6% Refused AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 11
D10. How would you characterize your political views? [READ EACH ITEM] 20% Very Conservative 27% Somewhat Conservative 18% Moderate 9% Somewhat liberal 9% Very liberal 12% None of the above 3% Not sure 4% Refused D11. [IF S1=age 50 or older, ASK Are you or your spouse currently a member of A-A-R-P? (n = 252) 41% Yes 56% No 1% Don t know 3% Refused D12. What is your 5-digit ZIP Code? (Write in your ZIP CODE): D13. We realize income is a private matter and so rather than ask you anything specific about your income; I d like to ask you to please stop me when I get to the category that includes your household s income before taxes in 2012. Was it [INSERT AND READ EACH ANSWER CATEGORY]? 7% Less than $10,000 6% $10,000 to less than $20,000 10% $20,000 to less than $30,000 6% $30,000 to less than $40,000 8% $40,000 to less than $50,000 6% $50,000 to less than $60,000 6% $60,000 to less than $75,000 8% 8% 4% 3% 4% 3% 22% $75,000 to less than $100,000 $100,000 to less than $125,000 $125,000 to less than $150,000 $150,000 to less than $200,000 $200,000 or more Not sure Refused That was our last question for tonight. Thanks you very much for taking the time to help us out. Have a great day/night! AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 12
AARP is a nonprofit, nonpartisan organization, with a membership of more than 37 million, that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse. We advocate for individuals in the marketplace by selecting products and services of high quality and value to carry the AARP name as well as help our members obtain discounts on a wide range of products, travel, and services. A trusted source for lifestyle tips, news and educational information, AARP produces AARP The Magazine, the world's largest circulation magazine; AARP Bulletin; www.aarp.org; AARP TV & Radio; AARP Books; and AARP en Español, a Spanish-language website addressing the interests and needs of Hispanics. AARP does not endorse candidates for public office or make contributions to political campaigns or candidates. The AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Learn more at www.aarp.org.state Research brings the right knowledge at the right time to our state and national partners in support of their efforts to improve the lives of people age 50+. State Research consultants provide strategic insights and actionable research to attain measurable state and national outcomes. The views expressed herein are for information, debate, and discussion, and do not necessarily represent official policies of AARP. Acknowledgements AARP staff from the state office in Louisiana, Research and Strategic Analysis, and State Research contributed to the design and implementation of this study. Special thanks are extended to Nancy MCPherson and Linedda McIver of AARP in Louisiana; Philene Taormina of State Advocacy and Strategy Integration; Rachelle Cummins, Brittne Nelson, Darlene Matthews, and Cheryl Barnes of The Research Center, AARP. RDD Field Services fielded, entered, and tabulated the data. Aisha Bonner designed the survey and authored this summary. For more information about this survey or the methodology, please contact Aisha Bonner at abonner@aarp.org or at (202) 434-3531. Research Center For more information about this survey, please contact Aisha Bonner at: 202.434.3531 or e-mail abonner@aarp.org AARP Survey of Louisianans Age 18+: Opinions on Pay Day Loan Rates and Legislation, October 2013 12