March 07, 2021
Loans show poor doing it tough
Loan applications to Nga Tāngata Microfinance to cover everyday household costs more than doubled last year.
General Manager Natalie Vincent says it shows beneficiaries and low-income earners simply do not have enough to live on or to save.
The 128 per cent increase included loans to cover basic health care costs, whiteware and car repairs.
There was also a 24 per cent increase in loans to repay high-interest, unmanageable debt.
Since changes to the Credit Contracts and Consumer Finance Act came into effect last June 2020, Ngā Tāngata Microfinance has repaid on behalf of its clients $128,000 in fringe lender high-interest debt with an average nominal interest rate of 45 per cent.
Ms Vincent says being poor is expensive, and inadequate income support rates lock financially vulnerable families in the poverty trap.
Those living on the margins have to find alternatives, and too often that means turning to fringe lenders which traps people in a debt spiral.
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