Ask any financial counsellor about Payday lenders and you will most likely be met with a shaking head of despair. ASIC has just raised an action against two companies and borrowers may receive a refund.
A payday loan is a high-cost short-term loan. Payday loans include small amount loans (loans of up to $2,000 that must be repaid between 16 days and 1 year) as well as loans borrowed over longer periods. Considering the amount of information and advice warning us about the associated problems with this style of lending you can be left wondering why this part of the industry seems to be thriving.
What most financial councillors are finding is that people just don’t have ANY money for emergencies. We are now paying for so many extras and its not just low-income earners caught with the cupboard bare. Outrageous power bills, unsustainable housing costs and even increased Government charges such as the Emergency Services Levy have eaten up any small savings people were able to make in the past. Savings they could draw upon for emergencies or normal credit card debt cycles.
These bills as well as the increased cost of living pressures are hitting people really hard and despite the warnings, the promise of so called easy money, without the hassle or at the click of a button, dressed in smart marketing sees many turn to Pay Day Lenders to deal with their emergency and set themselves on a track to a financial train wreck.
Looking through the ASIC (Australian Securities and Investment Commission) website you can see a long list of issues involving Payday lenders. The most recent actions are against Good2Go and Web Money Line with both having received enforceable actions against them for not complying with the responsible lending obligations in the National Credit Code.
If you currently have a payday loan from these companies or have used these companies in the past it will be worthwhile checking to see if you could be in line for a refund. Contact the Financial Ombudsman Service or speak to a Financial Counsellor.
Financial Councillors are free, independent and confidential. 1800 007 007 to book an appointment or call the Affordable SA Helpline to access information, support, or referrals 1800 025 539
It is great that a body such as ASIC is helping to make sure people have some protection but these sorts of actions take time and many decisions or outcomes are too late to prevent this sort of bad deal debt impacting on people’s future financial stability. If you are looking at schemes ask yourself about the longer term aspects of the promised short-term financial relief.
See ASICS release on these Payday lenders
See more news about pay-day lenders from ABC news
http://www.abc.net.au/news/2017-08-22/dark-truth-about-payday-lenders-interest-rates-opinion/8828462