Consumer Action Law Centre (Consumer Action) and Financial Rights Legal Centre (Financial Rights) are urging people to avoid applying for short term, high cost loans as payday lenders hook a new generation of borrowers via mobile apps and online.
Today the community legal centres launched the Watch Your Nuts campaign highlighting the dangers of these ‘fast’ loans to the fastest growing group accessing them – males aged 18-35.
Consumer Action CEO, Gerard Brody says increased social pressures to consume and the ‘why wait’ mentality are driving this group to borrow from payday lenders to fund their lifestyle.
“Payday loans seem like a quick and easy way to purchase things like holidays and entertainment, but they can be a fast track to long term financial difficulty,” he says.
“That cheap flight to Bali you bought using a fast loan app could cost up to 400% more in interest and fees.”
Brody says there is a brief window of opportunity to disrupt this type of borrowing behaviour among young men in particular, and to encourage them to consider the damage such loans might be doing to their future.
“We hope that the Watch Your Nuts campaign will get this crucial message across in a way that resonates with this audience.”
The dangers of fast loans are not restricted solely to young men. In 2016, Australians owed $1 billion in outstanding loans. Between 2015 – 2016 alone lending to “lifestyle borrowers” increased by 85%.
Karen Cox, CEO of Financial Rights says that many people are also obtaining these dangerous loans thinking it’s an easy way to get out of a financial hole after losing a job or a separation.
“But payday loans often make their situations much worse, particularly when high repayments mean people have to get another loan to cope” she says. “It’s a familiar story that taking out a fast loan is the start of a chronic debt spiral that takes years to escape.”
Cox says that if people find themselves in financial difficulty after taking out a fast loan, help is available.
For more information, visit: www.watchyournuts.com.au
Consumer Action Law Centre
Consumer Action Law Centre is a not-for-profit centre that campaigns to make life easier for people experiencing vulnerability and disadvantage in Australia. As a nationally-recognised and influential policy and research body, Consumer Action pursues a law reform agenda across a range of important consumer issues at a governmental level, in the media, and throughout the community directly. As a community legal centre, Consumer Action provides free legal advice and pursues litigation on behalf of vulnerable and disadvantaged consumers across Victoria, and is the largest specialist consumer legal practice in Australia.
M: 0403 193 146
Consumer Action Law Centre
M: 0401 096 507