Taking fast cash to another level
Financial counselors are freaking out about instant cash loan machines that are spreading throughout locations in NSW.
They are concerned that easy access to the machines that seem to be strategically located in low income areas will lead families into a debt trap.
These machines look very much like any other ATM and only require you to produce legitimate identification and your bank account information, after which you can almost instantly be approved for a cash loan from fifty to one thousand dollars. However, borrowers can increase their loan limit once they have utilised the machine for a number of times.
Just recently the machines have been appearing out of nowhere in low income areas and are now getting financial counsellors very worried.
To date, they have only been seen in New South Wales in areas like South West Sydney, the Central Coast and Wollongong so far.
Cash Loan Machines Make Cash Access Too Easy
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The enterprise responsible for introducing these machines has a message on it’s website stating the the ‘machines are being placed in local shopping areas to make access to cash easier’.
You normally get one to three months to pay the loan amount back.
Staff in one of the tobacco stores that has a machine installed commented to a TV channel that the devices were proving to be very popular. However, they also noted that the majority of those using the machine appeared to be from low income backgrounds.
There are now serious concerns that very vulnerable people will be targeted
Deliberate targeting of the disadvantaged
In fact, Graham Smith of the New South Wales Financial Counselors Association said he was concerned that the machines were being targeted at disadvantaged NSW communities.
He went on to say that his association had already been notified about three machines that had quickly appeared in Cessnock in the Hunter Valley region alone.
Out of the two smoke shops there, one has one machine and the other has two machines. Around Christmas time you can usually see a queue right out the door, he said.
Most experts agree that these machine are strategically placed to lure the most vulnerable in our society. Often these are individual who are on Centrelink benefits who are desperately looking for a way to get quick cash, who realistically in the long run can’t afford to be borrowing this kind of money.
Don’t fall into a trap
Anyone contemplating entering into one of these loans, whether it’s through a cash loan machine, online or in a retail store needs to exercise extreme caution.
Local Members of Parliament are now starting to voice their concerns.
Local politicians in and around Newcastle and Wollongong are speaking out about the cash loan machines popping up in their neighborhoods and want stronger regulations to protect vulnerable people.
However, as the regulations stand at the moment the machines are definitely legal under the current laws and are regulated the same way as any other payday loan company, which is by the Australian Securities and Investment Commission
Back in 2015 there was a Commonwealth Government review conducted on small cash loan credit laws, where they released a draft reform bill and it was released in October of that year. It recommended caps on the payments that could be made for these types of loans.
However, there were a number of dissenting members of parliament from the coalition ranks who didn’t want to have a bar of any Government introduced initiative.
They could spread like a plague
Local politicians have warned that more payday loan machines would start popping up in disadvantaged areas if strong action wasn’t taken soon.
The more of these machines that get placed out there in high traffic shopping centres the more cash strapped individuals will be attracted to them.
Think about it, you’ve had a few beers and lost all your money in the pub’s poker machines and you’re wondering what you can do next.
You spot one of these machines and you sign up to borrow $600 for 4 weeks, which means you had better come up with $744 in 4 weeks time to pay the loan plus incurred fees back.
The trap is, if you don’t pay that amount back on the agreed date you are going to be hit with further fees and penalties that will start to compound on top of what you already owe.
That said, you may have a perfectly legitimate reason for taking out one of these loans, however don’t foolishly rush into one. You should rationally consider all of your options before pushing the button.