Tasmanian organisations that support vulnerable people have raised serious concerns about the state's short-term money-lending industry. So called payday lenders, often located next to op-shops and social service providers, loan money for high interest rates, typically to people who have bad credit. Rick Tipping, who is the state co-ordinator for the not-for-profit No Interest Loans Scheme (NILS), said some payday lenders charged up to 240 per cent interest. "We see people driven to take out another high cost loan in order to buy food or other basics," Mr Tipping said. "We are worried it is driving people into hardship." Mr Tipping said he was troubled about the online growth of the industry and the combined effect of rent-to-buy schemes where people can pay twice the price for rented household goods. He said one recent client with a $1300 payday contract had to pay a further $885 in interest and charges. But a payday loan's true cost can skyrocket when payments are missed. One payday customer from Mowbray, a diabetic who was recently operated and can't work, was charged $20 for a missed payment on an $80 loan. "You have to pay a penalty for missing a payment even if it's not your fault," the woman who asked not to be identified said. The woman, who also had several rent-to-buy contracts, is so heavily indebted to the lenders she is unlikely to qualify for a NILS loan to buy car tyres. Tasmanian Council of Social Services chief executive Tony Reidy said some of the payday lenders practices were a worry. "We are concerned that lenders set up direct debit arrangements so that repayments are withdrawn from borrowers' accounts on payday or pension day - often before borrowers are able to withdraw money themselves for necessities such as rent, food, medical expenses, and bills," he said. The state government said anyone concerned should contact the Australian Security and Investments Commission. The Examiner unsuccessfully sought comment from several national short-term money lenders who have branches in Launceston. Tasmanians considering a payday loan should contact NILS, which offers interest free and no charge non-cash loans of up to $1200, to discuss their options.
Tasmanian organisations that support vulnerable people have raised serious concerns about the state's short-term money-lending industry.
So called payday lenders, often located next to op-shops and social service providers, loan money for high interest rates, typically to people who have bad credit.
Rick Tipping, who is the state co-ordinator for the not-for-profit No Interest Loans Scheme (NILS), said some payday lenders charged up to 240 per cent interest.
"We see people driven to take out another high cost loan in order to buy food or other basics," Mr Tipping said.
"We are worried it is driving people into hardship."
Mr Tipping said he was troubled about the online growth of the industry and the combined effect of rent-to-buy schemes where people can pay twice the price for rented household goods.
He said one recent client with a $1300 payday contract had to pay a further $885 in interest and charges.
But a payday loan's true cost can skyrocket when payments are missed.
One payday customer from Mowbray, a diabetic who was recently operated and can't work, was charged $20 for a missed payment on an $80 loan.
"You have to pay a penalty for missing a payment even if it's not your fault," the woman who asked not to be identified said.
The woman, who also had several rent-to-buy contracts, is so heavily indebted to the lenders she is unlikely to qualify for a NILS loan to buy car tyres.
Tasmanian Council of Social Services chief executive Tony Reidy said some of the payday lenders practices were a worry.
"We are concerned that lenders set up direct debit arrangements so that repayments are withdrawn from borrowers' accounts on payday or pension day - often before borrowers are able to withdraw money themselves for necessities such as rent, food, medical expenses, and bills," he said.
The state government said anyone concerned should contact the Australian Security and Investments Commission.
The Examiner unsuccessfully sought comment from several national short-term money lenders who have branches in Launceston.
Tasmanians considering a payday loan should contact NILS, which offers interest free and no charge non-cash loans of up to $1200, to discuss their options.
