Quick-cash offers driving Aussies into billions of dollars of debt
The need for quick cash is seeing Australians fall billions of dollars in debt.
Darren and Joanne from Brisbane have spent months paying off thousands of dollars of pay-day loans incurred by their 25-year-old son.
“It just keeps going up further and further, and they just keep hounding for more and more money,” they told A Current Affair.
Lenders are now trying new tactics to entice customers.
CashnGo kiosks have been installed in shopping centres across New South Wales.
Customers can have a loan up to $2000 within hours, if they enter their details and are approved.
Speaking to A Current Affair, News Corp personal finance editorSophie Elsworth warned against the machines.
“It's a real concern that you can go into a shopping centre buy your groceries and while you are there walk away with a couple of thousand dollars in the form of a cash loan," he said.
"It's frightening and the charges associated with these are very expensive."
The government announced a review into payday lending and consumer good leases back in 2016. Since then, no changes have been made.
Ray Pilven, 51, rented several goods, including his TV, mobile phone and washing machine through a credit agency.
He says he paid almost double for his goods and claims “they're ripping us off big time, and they know it.”
Fiona Guthrie from Financial Counselling Australia says, “it's really disappointing that the government has sat on its hands in respect to this, because that means thousands and thousands of Australians have paid more than they should have.”
She is now calling for tighter regulations across pay day loans, consumer rental plans and buy now pay later schemes.
“If it looks like credit, it smells like credit - it is credit and should be regulated like credit," she said.
Nearly 95,000 new buy now pay later accounts are being opened every month across the country. A recent report by ASIC shows one in six users had become overdrawn, delayed other bill payments or borrowed additional money.
Sophie Elsworth said consumers need to go back to money basics.
“Consumers need to be much more patient and go back to the old-fashioned technique of paying with cash, because as they say, cash is king," she said.
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