Poor Call for rates cap for payday loan fees
Reports have it that families who are in difficult financial situations are now turning to cash loans in order to cover the astronomical rates of power, gas, water, and food bills.
Payday loan lenders who are said to be slugging customers with repayment charges which are said to be equivalent to 900 per cent per year are now increasing as more households try to keep pace of the living costs.
Reports state that there is now an estimate of 380,000 Australians, with 100,000 Victorians, who are turning to cash advance payday loans in order to provide their necessities. One reliable report posted warning that the industry has grown tenfold in the past decade alone.
Zac Gillam of the Consumer Action Law Centre stated that lenders were found to be exploiting the poor and the pensioners by charging huge fees which have them trapped in over loans. According to the centre’s report titled Payday Loans: Helping Hand or Quicksand?, there is a total of $200 million in a year that is borrowed from payday advance loan.
Mr. Gillam stated that the continuous growth of the industry is scary as these cash advance payday loans cost an astounding amount as compared to others. He further stated that along with the rapidly rising cost of living, people are turning to these cash advance payday loans to be able to fill the income shortfall.
The report is recommending that there should be a nationwide cap on repayment rates as part of a Federal Government review of credit laws. Victoria is stated to have a 48 percent cap on their payday loans. However, this does not include fees and charges.
Glenn Davidson, national marketing manager of the Cash Converters Australia stated that providers were covered by new responsible lending laws. Davidson claimed that cash advance loans are preying on the vulnerable and the disadvantaged and stated that cash advance payday loans are also popular among a range of customers including professionals.
Administration costs were and putting a blanket cap on the interest rates and fees are going to deny the consumers access to payday advance loan.
