By CAMERON LUCADOU-WELLS
A SAFE money lender backed by the state government aims to release the grip of high-interest payday lenders in central Dandenong.
Good Money was set up by partners Good Shepherd Finance, National Australia Bank and the government in a shopfront in prime position in Lonsdale Street.
It will provide no-interest and low-interest loans up to $3000 to people who cannot qualify for loans from banks.
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Good Money estimates more than 23,000 Greater Dandenong residents — almost one in five — are severely or financially excluded. They cannot get a transaction account, credit card or bank loan, and may resort to cripplingly high-interest loans from ‘fringe credit’ providers, also known as pay day lenders.
The service is “long overdue”, South-Eastern Metropolitan Region MP Inga Peulich at the launch last Wednesday.
Good Money manager Tim Wong said low-income earners were entrapped in “a cycle of debt” to fringe creditors.
The lenders often charged upwards of 20 per cent interest a month, which could quickly escalate to 1000 per cent if left unpaid. “They are borrowing more just to pay the interest.”
The store is surrounded by 10 fringe credit providers in the area. Among them are The Cash Store, InstaCash and no-name entities promising “fast cash available”. There are also pawnbrokers and second-hand dealers like Cashmart and Cash Converters that offer pay day advances and personal loans.
A worker in Cashmart told the Journal up to 200 customers a week were looking for quick cash. “The economic circumstances around Dandenong are pretty dire,” she said.
The Good Money store also provides financial counselling and consumer advice.
Good Money is at 250 Lonsdale Street and is open Monday-Friday from 9.30am-4.30pm. Details: goodmoney.com.au.
CAUGHT SHORT
A 2012 study, Caught Short, interviewed 112 small, short-term loan borrowers on the role of small, short-term loans in the lives of Australians. It found:
■ Almost 80 per cent were on Centrelink payments or pensions.
■ More than 70 per cent had reported significant emotional, physical and psychological problems.
■ 37 per cent were on disability support pensions.
■ 40 per cent had dependent children.
■ 20 per cent were born overseas.
■ More than 50 per cent had taken more than 10 loans in the past two years.
■ The most common reasons for taking loans included paying rent, bills, food, and “had no money”.
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