18th Jun 2018
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Older Aussies increasingly relying on ‘payday loans’
Author: Janelle Ward
Big spike in ‘payday loans’

The number of stressed older Australians taking out ‘payday loans’ to enable them to get through to the next pension payment is six times higher than it was 10 years ago, research reveals.

Payday loans are accessed through ATM-like cash machines with the only details required being personal identification and bank details. The loan requests are processed almost immediately.

The machines schedule "loan repayments to match when you get paid" through wages or by Centrelink and charge a 20 per cent establishment fee and four per cent interest per month.

In 2005, only 1.6 per cent of these loans were accessed by stressed older Australians. By 2015, that number had jumped to 5.3 per cent, according to a report conducted by Digital Finance Analytics and Monash University for the Consumer Action Law Centre (CALC), Good Shepherd and Financial Rights Legal Centre.

The report assessed the number of financially distressed households in 2015 at 31.8 per cent compared with 23.5 per cent in 2005, and said the number of households using payday loans had almost doubled since 2005 to 643,087 in 2015. The average loan amount in 2015 was $2223.

Figures cited by Fairfax Media and obtained under freedom-of-information laws show more than 12,000 companies have been approved for Centrepay access.

The machines are regulated by the Australian Securities and Investments Commission (ASIC) in the same way as other payday lenders.

One company operating the loan machines is CashNgo. Founder George Hajjar told Fairfax Media: “We want to provide access to funds to those who desperately need it. We have never had one complaint. We take our responsible lending obligations very seriously.”

Loans have grown from $476 million to $538 million in the past year, according to CoreData, with stagnant wage growth and rising cost-of-living pressures seen as the main culprits.

Financial Counsellors Association NSW chairman Graham Smith said he was worried disadvantaged communities were being targeted.

“Unfortunately, I think these machines are targeting the most vulnerable in our community –people on benefits who are looking at a way of getting some quick cash that I don't think they can afford in the long run,” he told ABC Online.

He warned anyone considering a quick loan to proceed with great care.

“It's an area of our society where people are struggling, and with electricity bills increasing, people have got less and less money, and going to one of these organisations and getting a loan can often be a deep financial trap.”

Consumer Action Law Centre (CALC) chief executive Gerard Brody has cautioned that instant approvals means some people will end up with more debt than they can handle.

“If you find you are having trouble with your bills, don’t be afraid to ask for help from a financial counsellor,” he said. “Money problems can happen to anyone, and financial counsellors are well equipped to give you free and independent advice about options to help get you back on your feet.

“You can speak to a financial counsellor by calling the National Debt Helpline on 1800 007 007 or find independent debt help information on its website.”

In the YourLifeChoices Insights Survey 2018, an overwhelming 83 per cent of the 6694 respondents said the Age Pension and supplements were not enough to live on.

Have you ever used one of these machines? Do you struggle to meet household costs every month?

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    COMMENTS

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    Rae
    19th Jun 2018
    10:46am
    This is the stupid behaviour that is allowing prices to rise. Using debt to prop up a failing iconic model. If people just stopped borrowing for living costs and cut back to the bone everywhere the Government and businesses would soon fix the problem by increasing wages and pension share.

    As long as we continue feeding then by racking up debt they'll keep taking.
    GrayComputing
    19th Jun 2018
    10:52am
    It is time for all of us to rant at our MPs and Senators daily to take action for human decency and a huge stress reduction for pensioners

    NO ASSET TEST FOR A PENSION EVER AGAIN!
    A pension is not welfare.

    Most economist say we will save taxpayers money by dropping asset testing because of the massive overheads cost in running Centrelink and the 10,000 conflicting rules.

    Hiring more Centrelink staff will only increase taxpayer’s costs for processing the creeping insane red tape monster system politicians and well paid bureaucrats have created.

    Help scrap it now. Become a hero.

    Even poorer New Zealand has a NO ASSET pension so it is cheaper and user friendly.

    Why worry that few million$ earners get it too. That is peanuts to them, not enough for a good vintage champagne.

    Do retired and retiring people really look forward and want 100++ visits to/from Centrelink and be part of 3 million waiting queues and lost calls?

    Does your MP really like being part of the system that allows this indirect abuse of the elderly?

    This abuse is actually sponsored by our government and forced down to Centrelink and borders on a criminal act.

    Why do MPs normally compassionate persons let this Centrelink abuse happen at taxpayers’ expense?

    Some opposition and independent MPs stand to lose their chance at being part of the needed government changes

    We all need to tell our MP and senators every day that these criminal asset tests for a pension must be dropped now.

    Also contact opposition and independent MPs who can help us to get a fair deal on pensions

    NO ASSET TEST FOR A PENSION EVER AGAIN!
    Old Geezer
    19th Jun 2018
    11:48am
    So you think the OAP is a scam? I do too.
    Rae
    19th Jun 2018
    12:43pm
    OG how do you justify the Fraser government theft of that half billion Welfare Fund?

    Conservatives often bemoan the social benefits of the massive taxes, rates, levies, GST etc etc we pay but have no explanation of the moneys spent subsidising businesses. Not to mention the really rich who just take the benefits and refuse to pay anything into the pot.

    The OAP should be universal. You and I should get it too and them pay our normal taxes.

    The Party's Republic of China isn't really a good alternative.

    It's a scam when honest savers are disengaged and punished for their very discipline and success.
    George
    20th Jun 2018
    9:52pm
    Absolutely, GrayComputing, the more people push their MPs really hard with threats of voting against them, the better.

    Excellent comments, Rae.
    Old Geezer
    19th Jun 2018
    11:53am
    Even worse is that Paywave on cards now. That only helps thieves help themselves to your money. I disable all mine now as they cant use my cards.
    Anonymous
    19th Jun 2018
    1:36pm
    OG - you are on the money with this comment. I cant believe this tap and go rubbish has been allowed to proliferate. At least with a PIN, there is some semblance of security. The younger generation love it, but then they are a generation of no care, no responsibility, in my opinion. I realize that is a sweeping generalization, but I look at the number of boguns who drive, whilst off their faces on drugs; or think that it is possible to use a mobile phone and control a lethal weapon (aka car), at the same time! Take me back to the 60s please - at least I only had drunks to contend with, then! (But the music was great!).
    Sundays
    19th Jun 2018
    2:16pm
    I have to disagree. I use it all the time, convenient and no one knows my password. There’s a $100 limit. I have had my credit card scammed twice and in each instance the card never left my purse. I was in Australia but the transactions were made overseas. Crooks jus use algorithms to find the numbers.
    Old Geezer
    20th Jun 2018
    11:23am
    I hope you don't rely on that credit card as the next time you use it it may not work as there is no money left.
    OnlyGenuineRainey
    20th Jun 2018
    1:26pm
    I've been scammed several times, twice for quite large sums, and NEVER through PayWave. Bank has always remedied the problem. I use Paywave confidently. There is $100 limit, and my card is always kept very safe. Paywave is quick and convenient. But I do track my expenses carefully. I keep all receipts and I reconcile my statements meticulously and inform the bank immediately if I see a problem. There are far easier ways for crooks to steal than by stealing a credit card and taking less than $100 by using Paywave! Goodness, it would hardly be worth the bother to even try that method!
    Noodles
    20th Jun 2018
    3:42pm
    The old adage "live within your means" is quite true and always put something away for a rainy day.
    Noodles
    20th Jun 2018
    3:43pm
    Also it is not about how much you earn...it is all about how you use it wisely
    OnlyGenuineRainey
    21st Jun 2018
    3:52pm
    True, Noodles, if your income is sufficient to cover essentials and permit saving. If your income is simply not enough to cover essentials, it doesn't matter how wisely you use it, it isn't elastic! You can't make it stretch beyond a certain point. Those whose incomes are very low and/or who have high unavoidable expenses (eg. for health care) just don't have the choice to save.
    patti
    19th Jun 2018
    12:25pm
    Worrying but not surprising trend. Having cut "back to the bone" I have had to borrow against the equity in my house in order to do essential repairs, as the Centrelink advance would have been a drop in the ocean. If I had to try and pay out of my age pension I would soon be homeless. Not sure where else I can cut back, don't smoke, drink alcohol, gamble, go out much, eat meat and shop at op-shops for clothes. The car is the only thing left to give up and I won't be doing that any time soon.
    Rae
    19th Jun 2018
    12:56pm
    Yes patti. Young people should be taught the importance of saving a bit regularly throughout their working life for essentials in retirement.

    The OAP isn't enough for living costs in many places especially if rates and utility costs are high. The CPI is a joke as it doesn't measure home costs at all.

    Have you thought about renting out a room to cover the costs of repairs over a few years.

    I budget for mine by saving $30 a week towards the cost as home repairs are so expensive now. I'm fortunate to have a private income higher than the OAP as well as savings.

    If this austerity grinds on we may all have to take actions. I'm researching renting a room to a young public servant right now. It helps there is a hospital close and boarding for that first year is something young nurses often do.

    I've also stopped spending on anything bar essentials and making chicken and pork and eggs my go to protein.

    The library and free to air TV plus gardening is occupying my relaxation time cheaply.

    The point I was trying to make is that while ever we continue using debt instead of income the likes of the LNP, BCA, IPA, etc will not understand the issues we face. They believe everything is still okay because we are using debt to make it appear so.

    Someday soon the bill for all that debt will fall due and it will not be pretty.
    Anonymous
    19th Jun 2018
    1:43pm
    Rae, I don't understand your attack on the Libs and big business on this issue. I reckon the other side have a lot to answer for - they are the mob who promulgate the philosophy that you can have what you want now, and everything that goes wrong is always someone else's fault. Hence the rise in our American style litigation led by the two Labor Party stalwart firms S & G and M B and the no win no pay formula. Have a real good look at what is actually happening Rae, before criticizing.
    Rae
    19th Jun 2018
    2:17pm
    Yes Big Al the ALP is to blame for much of the mess the bottom two quartiles find themselves in. Keating's love affair with Thatcher and Reagan cost me a house when business loans hit 24%.

    Right now though the LNP are in power, have been for 18 years of the last 22 and so yes I think they need to lift their game and help out the bottom. They listen too much to the BCA and IPA and not to their rank and file.

    They've gotten away with blaming the poor for poverty for long enough don't you think?

    If we all stopped borrowing then the businesses would once more realise just who their customers actually are and share a bit.
    Private debt has ballooned to 190% of incomes and at $6.8 trillion is unsustainable.

    Just borrowing more and more to kick the can down the road is very naughty of a government with this much time in power and what do we have to show for it all.

    The share going to business is much higher now than at any time since 1928.
    KB
    19th Jun 2018
    2:29pm
    Centrelink has a loans scheme for people who need essential items. I know of many people who do this and keep themselves in debts. As a result of having to repay the loan there is less to live on for essentials such as food. The government must raise aged and disability pension to a higher level as t he more you become older the more needs you have. Services cost money,
    almost a grey hair
    19th Jun 2018
    1:54pm
    This piece of amateur journalism is simply a beat up, as 10 years ago this loan product was simply not available. No wonder its used 10 times more now than it was then.
    The people that use these services are no more capable of controlling their finances now than they were 10 yrs ago, thats the problem.
    Will they ever learn ?
    Anonymous
    19th Jun 2018
    4:29pm
    Spot on almost a grey hair! Could not have put it any better myself!
    Not a Bludger
    19th Jun 2018
    3:46pm
    What an appalling situation.

    All you permanently outraged have piled into the Banks (on account only of a few bad apple employees) and as a result knocked out some reasonable checks on a persons ability to repay a loan before they got it and, hence, opened up all these payday type loan facilities (all at usurous interest rates) with no controls or legislation.

    And to hear that some (misguided) pensioners are being entrapped - appalling - where are the leftie screams for a Royal Commission on this one?
    Not a Bludger
    19th Jun 2018
    4:01pm
    Come on Mick - get out of your pollies office on this one.
    Anonymous
    19th Jun 2018
    4:32pm
    I would love to know how much of the money being borrowed is finding its way to the local club and/or a phone betting account. Now that would be a revealing set of circumstances if any PHD student was game to have a go at tracking such expenditure behavior.
    Mutley
    19th Jun 2018
    3:51pm
    Tell me my reckoning is wrong; if I borrowed $1,000 it would cost me $200.(20%) set up plus 4% per month 48% per annum. Hmmmm????? Probably more if nothing were to be paid off in a year.
    niemakawa
    19th Jun 2018
    4:07pm
    And it has been said that as people get older they become wiser. Anyone in their right mind would never use such a facility to top-up their spending needs.

    19th Jun 2018
    7:48pm
    j.l.c. is the above statement re: loans, just about pensioners or about the general population, I think it is the later, I challenge pensioner home owners to come up with an argument why you can't live on to-days pension apart of those having to lease a property, yes we all would like more and more however when we look back to the times we were young and had to turn over every penny before we spend it we are now living in paradise if I want to buy anything I go and get it, if I want to go overseas I do so, if I want to go out for a meal, may it be only the pub or club I do so, for those who need a loan to tie them over just learn to budget and it wont be long to have a great life as I have to-day
    OnlyGenuineRainey
    20th Jun 2018
    1:35pm
    Fortunately, I am not a pensioner, but I couldn't live on the OAP given my partner's and my medical costs and other issues. This year, so far $9000 for eye surgery for my partner, with only just over $2000 refunded from Medicare, and $30,000 for dental care with no refunds. Council rates exceed $80 per week. Fortunately, solar energy and a warm climate keep our power bills under control, but I feel for those who don't have that advantage. $80 per week average for transport to medical appointments and shopping once a fortnight. Special dietary needs add $30 per fortnight to an average food bill and medicines come in at $18 per week (until the safety net cuts in). Then there's the massive hit 4 times a year when we take orphaned grandchildren in during school holidays. With three in their teens now and all with huge appetites, it's nothing to go through an extra $300-400 per holiday when we add food, clothing (we always buy them things as they have very little) and some entertainment, and Christmas adds another $300 or so for food and gifts.

    Everyone's circumstances are different. I'm not complaining. I'm sure I could cut back a little somewhere if I had to. I am lucky to be able to meet these expenses, but I would never be cruel enough to suggest that every homeowner is mismanaging if they are finding budgeting a struggle. Until you walk in their shoes, you just don't know what you don't know.
    Charlie
    19th Jun 2018
    8:51pm
    Silly just like poker machines in banks.
    niemakawa
    19th Jun 2018
    9:06pm
    Which bank has poker machines I would like to open an account!!! Need some entertainment whilst waiting in the queue!!!
    Charlie
    19th Jun 2018
    11:18pm
    By the time you reach the teller you wont have any money left.
    niemakawa
    19th Jun 2018
    11:55pm
    But I will withdraw more and go to the end of the queue and wait again.
    George
    20th Jun 2018
    9:57pm
    "...more than 12,000 companies have been approved for Centrepay access."
    Clearly a massive industry run by thousands of sharks - and the Govt (of both types) has been sitting and watching? The industry needs to be shut down!
    Centrelink should advise all such requests for Centrepay deductions to approach Charity institutions if needed. Now that is something the Govt can help Charities to take over and administer - provide low interest loans for needy people without ripping them off!


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