Loans-by-txt company lures Kiwis

UPDATE 4.30pm: National’s inaction on loan sharks has been exposed by a new text message loan service which charges interest rates of up to 292% per annum to vulnerable consumers, Labour’s spokesperson for Consumer Affairs Carol Beaumont said.

“Finance company Ferratum New Zealand is now offering loans of up to $600 - via cell phone - in a scheme which Country Manager Richard Yoon says is ‘hugely beneficial’, allowing consumers to complete purchases, which may have otherwise been declined, on the spot in a ‘couple of minutes’.

“Ferratum suggests its service allows lenders to meet urgent needs such as grocery bills. This reveals today’s stark reality. Families are lending to feed their families. They cannot combat the rising cost of living alone.

A review of the Credit Contracts and Consumer Finance Act is languishing, Ms Beaumont said. "Provisions in that bill would have lowered interest rates, tightened the responsibilities of lenders and ensured a company like this could not prey on vulnerable consumers."

Labour is promoting two private members bills that Ms Beaumount said would crack down on loansharking and "irresponsible lending."
 

Loans-by-txt company lures Kiwis

6am: Those who get up in arms over the antics of instant finance companies have fresh reason to be outraged this morning.

Finnish company Ferratum Group has hired a PR company to push the fact it’s just opened its first Asia-Pacific office, which is offering New Zealander’s “micro loans” via their mobile phones.

The process of accessing small amounts of cash is purportedly easy. If you’ve got a good credit record, you can apply online via Ferratum’s website, or simply send the European company a txt.

Your first hit is free
First time customers can borrow $100 for 15 days, with no interest.

After that, life becomes more complicated.

There is an establishment fee of $28 but, more, an interest rate that Ferratum’s Terms & Conditions state (on page 7 of 18) is 292% per annum.

There’s nothing micro about that.

Of course, if you pay back the money faster, the interest is less, but it's still bracing. Ferratum's own online calculator says you would have to pay back $948 on a $600, 45-day loan.