Three weeks after it was launched, Otago’s new community finance programme is attracting more than 100 inquiries a week.
The initiative, a partnership between Good Shepherd NZ and the Bank of New Zealand, is being administered by Presbyterian Support Otago.
The programme offers “NILS” no-interest and “StepUp” low-interest loans to people who might traditionally turn to predatory lenders.
South Dunedin-based community finance co-ordinators Mel Aicken and Lloyd Maole have heard worrying stories from people, from beneficiaries to low-income workers, wanting to access loans.
Among them was a lady in her 70s, who was recently granted a $5000 loan to buy new furniture with repayments of $80 a week, Ms Aicken said.
“To have that much coming out of a pension each week is a lot, and now she is worried about keeping up the repayments,” she said.
“This lady’s situation shows how his type of lending is very, very expensive.”
Another was a man in full-time employment, who had been struggling to pay down a personal loan and credit card debt for several years.
“That person feels trapped in their current situation,” Ms Aicken said.
“And that is the reality for many people.
Many people who made contact about possible loans were looking for debt consolidation options, although this was not the purpose of the scheme, Ms Aicken said.
“What it is doing is highlighting the levels of unsustainable debt out there, which is making life very tough for people.”
In Dunedin, Presbyterian Support Otago’s clients had a combined debt of $4.2 million – an average debt per person of $25,123 (excluding mortgages).
Mr Maole said getting the community finance programme up and running provided people with limited incomes with “a safe option”.
The StepUp loan provided up to $5000 at 6.99%, and was an ideal way for people to buy vital items, such as a second-hand car.
“It keeps it safe and affordable, which is very important.
Ms Aicken said people were often caught out by the instant nature of finance where they could walk away with a coveted item, and a large debt.
“When people come to us, we do sit down and look at whether they can really afford it.”
The Otago community finance co-ordinators welcome opportunities to give presentations to community groups. For information email email@example.com.