“Vulnerable families are falling victim to exorbitant interest rates and draconian penalty clauses. Many of these families have poor English and simply don’t understand the contract they are signing or the potential consequences if they default. Some families are under incredible pressure because of the rising costs and these loan sharks are simply feeding off their vulnerability,” says Bob McCoskrie, National Director of Family First NZ.
“Many of the issues around domestic and family violence are related to the stress of payments to these loan sharks, especially by low-income families. The loan sharks also specifically target low socio-economic areas where the desperation for fast cash is prevalent.”
Family First has previously called for a maximum interest rate to be able to be charged on these contracts, a standard default clause with no surprises, compulsory registration of lenders, and the availability of legal advice for vulnerable families.
“At the end of the day, you can’t change people’s spending habits or unwise money choices, but we should place as many safeguards in place as possible to prevent exploitation of these people,” says Mr McCoskrie.