Interest-free loans are real and are sure to beat the payday sharks

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Hi Nicole,
I’m really struggling to make ends meet and I’m afraid I’m in for a disaster – nice white, car, whatever – far from ruin. It’s not that my job is precarious but as a single mother of two young children and working part-time, our living expenses eat away at everything I earn. I don’t have a credit card and wanted to ask you about the ads I see for cash before payday. They look legitimate, but is this a scam? I would just like to know that I have some sort of back-up plan if everything gets too tight a month. Thank you Deborah

Wow there Deborah. I agree that the ads are starting to look brighter and more believable – and in the low-cost, often cash-strapped areas where I live, they now fill most of the ad breaks.

Payday loans may look attractive, as the bills you rack up could be affected by prohibitive interest rates.Credit:AFR

But make no mistake, these so called payday lenders are more accurately known as loan sharks and typically “swallow” the equivalent of 112% to 407% interest over a year.

Even so, an upcoming crackdown has been maddeningly slow.

Although it was the Coalition in November 2016 that proposed a 10% cap on the amount of a borrower’s income that small-value credit contracts like these can consume, a Labor offer to push the same limit in Parliament two weeks ago ran out of time. .

Enough already. While our deputies are messing around Digital financial analysis figures suggest 1,136 new households per week have turned desperately to payday lenders since the publication of an industry review in April 2016.

Do not go

As MP Madeleine King said during the presentation of the private member’s bill: “Australia will not thank this government for its delays during which 150,000 other households took out payday loans in the United States. current predatory environment.

The proportion going to women has also jumped 22 percent over the past two years, with 40 percent of all women being single parents.


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