(Montreal) Research on household debt in Quebec concludes that repaying amounts is increasingly difficult for a growing number of borrowers.
The study also managed to target four groups more vulnerable than the others: young people, single parents, racialized people and newcomers.
Research that the National Institute of Scientific Research (INRS) carried out with more than 4,800 respondents reveals that 18% of the Quebec adult population encountered great difficulty last year in repaying their debt. With inflation and the increase in the cost of living, researchers also found that this proportion continued to increase during the first half of 2023.
The report entitled “Over-indebtedness among Quebec households” that the INRS published on Tuesday looks at the reasons that lead to borrowing or using credit. In addition to the purchase of real estate, a car or the financing of studies, the director of research, INRS professor Maude Pugliese, observed among many respondents loans linked to the loss of a employment, illness, support of a loved one or a child, separation or the combination of several of these life events.
Thus, more than 70% of people who take out a loan to compensate for a job loss or illness have difficulty repaying their debts.
And in the event of financial difficulty or projects requiring a certain amount of money, these populations can turn to private, unofficial or online lenders. Under non-transparent terms, these impose up to 40% interest on the amount granted, while not everyone has access to conventional bank loans, as Professor Pugliese points out.
The report therefore suggests that financial institutions put in place initiatives allowing each individual to feel legitimate and welcome in their spaces. This concept calls for greater flexibility and a better understanding of different profiles.
Regarding the particular difficulties of single-parent families and separated parents, researchers have observed increases linked to food and housing expenses, which causes great tension in household finances.
On the other hand, researchers recommend maintaining and enhancing government assistance programs: employment insurance, family support programs and even disability benefits. In this regard, better financial literacy among the population appears to be increasingly essential. For example, at a time when a loan can be finalized in a few clicks, understanding the consequences surrounding the notions of credit and debt is becoming more important, according to researchers.
Maude Pugliese believes that research data is a real gold mine for better decoding the principles of over-indebtedness among the Quebec population and that it can serve as a tool of understanding for the communities concerned.