Maybe if you are reading this you are considering taking out a “payday” loan with Wallet Wizard, Cash Converters or the Loan Arranger. I want to be blunt here. These companies are financial bloodsuckers that prey on your desperation. Do everything in your power to not take out a loan with these companies.
Nimble also fits into the blood sucking category. To read my blog dedicated just to Nimble Click Here
I have worked through an example of borrowing $1000 from each company and let me summarise the results before giving the details.
- Cash Converters charges the equivalent of an annual percentage rate of 68% but is possibly as high as 76.8% – its a little ambiguous.
- Wallet Wizard charges the equivalent of an annual percentage rate of 69%%
- Loan Ranger charges the equivalent of an annual percentage rate of 56%
This is simply financial rape. This simply is preying on the poor and vulnerable. It is outright exploitative….
Whenever is a 70% interest rate justifiable? Why does the Australian Government allow the operation of Loan Sharks within it’s borders. For the record the highest interest rate legal under Australian law is 90%. What is that about????
Now I understand that people who take these type of loans often have a poor credit reference rating and are therefore the loan must carry a risk loading. But considering an unsecured personal loan from an Aussie bank is sitting about 13% how do these companies justify a 57% risk loading?
It simply is not right.
And if you are looking at using one of these companies or similar I would strongly encourage you to look for alternatives including the program called NILS – No Interest Loan Schemes:- Click here for the NILS Website
Here are the details of the examples I worked through.
1) Wallet Wizard
If you borrow $1000 from Wallet Wizard you will repay $211.67 per month for 6 months. See Image 1
This is a total repayment amount of $1270.02 which means you paid $270.01 in interest.
Plus as the second image shows you will have paid a $45 application fee and a $1.15 per week ‘service fee’: Which all up totals $74.90 for the example we are working through.
So $270.01 + $74.90 = $344.92
or 34.5% over 6 months or annualised to 69%
2) Cash Converters
If you borrow $1000 from Cash Converters, you would pay back $680 over and above the original $1000 which means you have paid the equivalent of a 68% interest rate. Now if you look at the image below you will see they are saying that the average loan repayment is $34 per week over a year. Well if you work that out 52 X 34 it equals $1768 which would make the interest rate 76.8%.
3) Loan Ranger
With the Loan Ranger they charge you an up front fee of 20% of the principal and then a 4% fee per month. So 20% plus the 4% per month works out at approximately 56%. 20% + (4% x 12)= 56%. Now this isn’t entirely right as the 4% would be reducing each month so in the interest of being fair it probably is more like a 50% interest rate instead of 56%. However if you are late with a payment they charge you a fee of $38.50. Still exorbitant in any one’s world.
Reality is that these finance companies are nothing more than Loan Sharks who prey on the financially weak and financially vulnerable. As a Pastor I look in the bible to where the Prophet Amos was chastising the Nation of Israel for exploiting the poor whilst they enjoyed unprecedented prosperity. I wonder what Amos would say to Australia as a nation as we sit back and silently allow this exploitation of people in financial trouble.
Anyway that’s what I think.
You may also be interested to read some other blog posts about money that I have written:
Ps Peter Pilt
For the record: Global Care, the organisation I work for, runs several significant NILS operations.
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