Payday Loan Use Among People With Lived and Living Experience of Substance Use

Due to high-penalty lending practices, short-term, small-dollar payday loans can trap borrowers in cycles of debt and reinforce socioeconomic disadvantage. People with lived and living experience of substance use (PWLLE) who often contend with financial and labour market exclusion and have relatively inflexible cash flow needs may be particularly susceptible. Nevertheless, the use of payday loans among PWLLE is not well understood.

Using cross-sectional data extracted from two longitudinal cohorts of PWLLE in Vancouver, Canada, this exploratory study characterises prevalence and correlates of payday loan use. Logistic regression models explore financial, structural, and substance use dimensions of potential relevance to payday loan use.

Between December 2017 and June 2018, 318 (29%) of 1082 participants reported obtaining at least one payday loan within the previous six months. In multivariable analysis, engagement in employment, including full-time, part-time, casual, temporary or self-employment, was associated with lower odds of payday loan use (adjusted odds ratio [AOR] = 0.65, 95% confidence interval [CI] 0.48-0.89). Conversely, average daily expenditure exceeding $50 on drug purchases (AOR = 1.41, 95% CI 1.02-1.94), and heavy alcohol use (AOR = 1.52, 95% CI 1.04-2.21) were associated with increased likelihood of payday loan use.

Our findings add to understandings of how income generation and higher-intensity alcohol and drug use may shape use of high-penalty short-term loans, with implications for social service provision. Findings emphasise the potential role that employment programs and alternative approaches to bridging intermittent financial hardship could play in reducing socioeconomic precarity among PWLLE.