Loan scheme to knock out ‘loan sharks’

NZ Herald 13 August 2014
Almost 1 million families will be eligible for low- and no-interest loans under a new Government-backed scheme aimed at saving low-income families from “loan sharks”.

The Community Finance scheme, launched by Social Development Minister Paula Bennett in Manukau today, starts with $10 million in initial finance from the Bank of New Zealand and a small Government subsidy for administrative costs.

The “front door” to the scheme will be the Salvation Army, initially on a pilot basis in its Manukau and Henderson offices where many clients have been paying interest to “loan sharks” of up to 10 per cent a week – 520 per cent a year.

The new scheme offers two kinds of fee-free loans:

• A no-interest loan scheme (‘NILS’) of up to $1000 for up to 18 months from early September.

• ‘StepUp’ loans of between $1000 and $5000 for up to three years at 6.99 per cent interest from today.