LOCALS in desperate financial situations are continuously being preyed on by loan sharks, leading one not-for-profit community organisation to offer interest-free loans to deter people from them.
Swan Hill Neighbourhood House coordinator Lea Johnson revealed cash-strapped locals, whose financial hardships have been made worse by payday loans, show up to the organisation on a daily basis.
“Sadly many then take out another high cost loan just to get by, leading to a debt trap,” Ms Johnson said.
“It’s just been shown over the years that these [payday loan providers] just aren’t regulated enough or their criteria around lending is a little bit light-on for regulation.”
Even though payday loans reach annualised interest rates of up to 240 percent, Ms Johnson felt many people turn to them because they think they don’t have any other choice.
“Most Swan Hill and surrounding district residents who take out payday loans do so because they’ve been shut out of the mainstream credit market and they think these loans are their only option, but many would be eligible for the No Interest Loan Scheme,” she explained.
“Swan Hill Neighbourhood House provides NILS loans to people on low incomes for household items like fridges, computers and washing machines, as well as education costs and car repairs,” she said.
Neighbourhood House has handed out more than 800 NILS loans to people in Swan Hill since it started lending them out four years ago, a rate of more than 200 a year.
For more on this story, grab a copy of Friday’s Guardian (May 1).
