547 and a half percent – Loan Orca loose

Guest post by Kevin O’Brien

I'm coming for your bacon at 547.5% annual rate.

I’m coming for your bacon at 547.5% annual rate.      Click to enlarge.

Let the borrower beware.

Once interest rates beyond 48% annualised were unconscionable, now in New Zealand, we have no limit. The Credit Contracts and Consumer Finance Act 2003 is a national disgrace in removing the old restraints and general possible review of loan contracts by the Courts. The Act has smoothed commerce but it now putting smiles on the faces of the loan orcas ( like loan sharks but nastier) who are increasingly becoming more predatory. ‘Save My Bacon’ – a NZ loan company – may do anything but that if they call in external debt collectors following a default. They say they freeze the interest after 45 days before they renegotiate from there, with the amount repayable growing by a further 67% during that time. The daily interest rate is 1.5%. Depending on compounding the annualised rate may exceed the 547.5% (1.5%x365). Continue reading