A coalition of community organisations has been to Canberra to call on the Federal Government to immediately introduce legislation to cap costs on payday loans and consumer leases – expensive financial products that target people on low incomes.
The coalition, which includes Good Shepherd Microfinance, CHOICE, Consumer Action, Financial Counselling Australia and Financial Rights Legal Centre, has also encouraged Parliamentarians to support the No Interest Loan Scheme (NILS), which offers a fair and affordable, not-for-profit alternative.
Bellingen Neighbourhood Centre knows the financial harm caused by ‘rent to buy’ deals.
No Interest Loans Officer, Wendy Graves, said payday loans and consumer leases, often called ‘rent to buy’ deals, are promoted as an easy way to purchase household items and pay for other expenses, but typically make someone’s financial situation worse.
“Most rental contracts will see you pay around three times more than a product’s retail price, while payday loans have huge interest rates and crippling default and late payment fees,” Wendy said.
“The sad thing is that these companies target people on low incomes – those in our community who can least afford to be paying a premium.”
On November 28 last year, the Federal Government agreed to introduce legislation that would:
- Cap consumer lease fees at 4 per cent of the Base Price of the goods per month, for a maximum of 48 months
- Cap payday loan and consumer lease repayments to 10 per cent of the consumer’s net income
- Require equal repayments over the life of a payday loan
- Prohibit monthly fees if a payday loan is repaid early
- Ban unsolicited offers of payday loans to current or previous customers
Bellingen Neighbourhood Centre is encouraging our Federal member for Cowper, Luke Hartsuyker MP, to support the introduction of these measures.
The No Interest Loan Scheme (NILS), offered locally by Bellingen Neighbourhood Centre for residents of the Shire, is a better way to pay for furniture, whitegoods, computers and car expenses.
“Bellingen Shire NILS provides safe, fair and affordable loans of up to $1,200 to pay for essential goods and services,” Wendy said.
“The relationship with clients is so much more than that of credit provider. There is trust and connection to community. If you’re thinking of renting or using a payday loan, think twice and drop by Bellingen Neighbourhood Centre or give us a call on 6655 1239 to see if you’re eligible for NILS.
“With NILS you’ll only ever repay the amount you borrowed, not a cent more.”