For everyone short on cash and turning to loan-sharks as their last option, good news: the Government has just made borrowing a lot safer. Prime Minister Jacinda Ardern announced yesterday there will be an interest cap on high-cost loans to stop vulnerable people digging themselves into more debt.
Under the new scheme, interest fees and loans won’t be able to exceed 100 percent of the amount borrowed. This essentially means if you borrow $500, you will never have to pay the lender back more $1000, including interest and all those niggly fees.
And as for those cruel “mobile shopping trucks” —the ones that prey on the vulnerable people who can’t get to a shop—the Government is cracking down on them to. A Newsroom investigation earlier this year revealed these trucks that cruise the poorer suburbs of Auckland were selling 24 cans of corned beef for $359, when Countdown sells the same product for $233.
The Government will undermine the ridiculously overpriced service by introducing a “fit for proper person” test that mobile traders and heads of companies offering consumer credit contracts will have to pass in order to operate. "These new measures will halt the very worst of those preying on vulnerable and desperate people while enabling borrowing that meets their needs in an affordable way," Ardern said.
Tougher penalties will be also be enforced for irresponsible trading. Minister of Commerce Kris Faafoi said any lenders breaching new rules would face fines of up to $600,000.
The new measures will come into effect from 2020, subject to Parliamentary timeframes.