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.
As first reported last week by the Journal online, 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.
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 was “long overdue”, South-Eastern Metropolitan Region MP Inga Peulich said at the launch last Wednesday week. 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.
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. It is at 250 Lonsdale Street and is open Monday-Friday 9.30am-4.30pm. Details: goodmoney.com.au.
THE CAR LOAN THAT LIBERATED
GETTING a low-interest car loan has made a world of difference to Fatme Ibrahim.
Newly arrived from Lebanon, the unemployed single mother of children aged four, eight and nine had been knocked back for personal loans from three banks.
‘‘Last year I was in a lost mood. Without a car, I couldn’t go anywhere without waiting for a train or a bus. I had appointments everywhere — for the bank, the school, the doctors, Centrelink.
‘‘You can’t just keep asking other people to take you places.’’
She recently applied for a $3000 Step-up car loan — similar to what’s offered at Good Money — from Dandenong Community Advisory Bureau. She paid about $100 interest.
The freedom since has been liberating. Ms Ibrahim says she feels more confident about applying for part-time work, now that she has swift personal transport to get from workplaces to her children’s school.
‘‘I know lots of people on Centrelink who don’t know about these loans. I know people who have gone to [a fringe lender] and if they don’t pay on time, they have to pay high interest. They should advertise these low-interest loans more.’’
Manager Jinny McGrath said the bureau received more than 3100 inquiries about the loans in the 2011-12 financial year. Of those, 136 successfully applied for loans totalling $392,000.
“One could surmise that a large proportion of those who inquired would want money to pay off debts [which these loans do not cover] or may have debts of more than $500 and thus not be eligible,’’ she said.
– Cameron Lucadou-Wells
What do you think? Post a comment below.
For all the latest breaking news, stay with this website. Also, follow the Weekly at facebook.com/dandenongjournal or on Twitter @DandenongJournal.
