Payday lending: the facts
High-cost short term loans, with effective interest rates upwards of 400 per cent, cause poverty.
Many low income earners take out payday loans to pay basic living costs but then find they can't afford essentials like food and rent. So they take another payday loan which sends them into a spiral of debt. Read more
9 Payday Myths Busted
3. “illegal money lenders will fill the void”
No link has ever been shown, anywhere in the world, between interest rate caps and a rise in illegal lending activity.
This is just one of nine payday myths busted here.
What should be done?
Borrowers in NSW, QLD and the ACT currently benefit for a comprehensive interest rate cap of 48 per cent. That is to say, lenders can charge a maximum of 48 per cent interest, inclusive of all fees and charges. But, at present, borrowers in other states are faced with effective interest rates upwards of 400 per cent.
Consumer and welfare groups are supporting the Government’s proposed regulations which will give a similar level of protections to all Australian, regardless of their postcode. Read more..
Help with debt problems
Many people think they need to use payday loans when they can't pay their debts, but better options are available.
Free financial counsellors can help. Call 1800 007 007 or find one here.
Alternatives to short term loans include No Interest Loans, Centrelink advances, Centrepay and applications for hardship relief to an existing creditor. Read more ..