According to this Consumer Trends Report by the Canadian Office of Consumer Affairs (OCA) we are seeing an increasing use of finance company loans by seniors (and, to a lesser extent, by the general adult population).
An increasing prevalence of high interest rate loans with poor credit ratings could be an indication of potential financial distress for some seniors in the future.
The number of finance company products increased at an average annual rate of 42.6 percent for seniors, from about 4700 loans in 1992 to 163 400 in 2002. This compares with an average annual growth rate of 28.8 percent for the adult population as a whole, from approximately 268 500 to 3.4 million loans.
As the young adult population grew only very marginally over this period (at an average annual rate of 0.4 percent), this represents very significant growth in installment loans.
The number of loans from traditional financial institutions grew at an average annual rate of 16.2 percent over the decade (from approximately 487 000 to 2.2 million loans), while the number of installment loans from finance companies increased at an average annual rate of 37.6 percent (from approximately 14 300 to 348 900 loans).
Because finance companies generally charge a higher rate of interest on loans than do traditional financial institutions, this is generally bad news for these people.
The cost of paying back these more expensive loans means there is less money remaining for the good things in life or even for their basic needs.
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