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

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Child poverty? Debt Menace?

Loan Shark Flyer

Loan Shark Flyer (Contact details hidden.)

There has been a lot of hand-wringing recently here in New Zealand about child poverty, citing the numbers of kids who go to school hungry, or with no lunch. The Opposition and the Church have joined an internationally driven campaign for higher wages, a ‘living wage’. But this campaign has some serious flaws in its New Zealand setting. Kev has already commented on this.

Children in themselves have no power to earn, so child poverty always should point to the adults who have left the child in this position. As local Mayor Michael Laws calls it, ‘piss-poor parenting’. Here I agree with him whole-heartedly. People who call themselves parents should have the brains and the drive, as well as the sense of responsibiity for their offspring to feed them properly, and provide the bare necessities at least. No, it’s not a matter of too little money on the benefit. We are on National Superannuation with little extra, and we manage to feed and clothe everyone adequately.

But this is because we do not waste our resources.

I believe that much of the ‘child poverty’ in New Zealand is because of terrible choices made by parents – choices that involve spending scarce money on cigarettes, alcohol and gambling. This country has a really bad record for the normalisation of gambling, even in the kindergartens where the fund-raising raffle is an annual fixture.

But there is another menace in the neighbourhood, that even further preys on poor families, this time targetting the Polynesian community in particular. There was a flyer put in our letter box yesterday, advertising loans –  $1000, to be repaid at $50 per week, for 8 months. Continue reading