Borrowers warned about huge interest rates

NZ Federation of Family Budgeting Services warns to be sure of what you are signing.

NZ Federation of Family Budgeting Services warns to be sure of what you are signing.

Anyone who does not check and think about what they are signing could end up being hung out to dry. File picture

A NEW lady is in town to help with finances and her name is Pretty Penny.

An advertising flyer depicting a cartoon lady with a blonde bob, pink heels and short skirt, who says she can help you, is a cash loan company charging annual interest rates (AIR) of up to 365 percent.

Gisborne residents found the flyers offering quick cash loans from $50 to $300 in their letterboxes last week.

NZ Federation of Family Budgeting Services national president Carmel Thompson said it was one of the highest interest rates she had heard of.

A $200 cash loan from Pretty Penny, repaid over eight weeks, will cost you $472. That is 136 percent interest over the two months.

If you want to pay it back quicker, say one week later in a lump sum, that will cost you $323, or interest of 61.5 percent for your original $200.

Pretty Penny operates under QUADSAA Pty Ltd, an Australian company that registered in New Zealand six months ago with a Christchurch address.

The call centre is in Queensland and staff shied away from using the words “interest rates” but instead refer to “fees” and “charges”.

Pretty Penny Loans spokesman Mark Swanepoel said they did not shy away from advertising their AIR is 365 percent.

“When compared to large players in the short loan industry, you can see that such a rate is very competitive — see savemybacon.co.nz with an AIR of 547.50 percent, paydayloan.co.nz with an AIR of 502 percent to 602 percent,” he said.

Short-term loans

Pretty Penny touts short-term loans and you don’t need a job to apply. Just one of three things — a job, a phone plan or a guarantor — is all the company requires.

New laws introduced in June gave the Commerce Commission more power to protect vulnerable New Zealanders when they borrow money or buy things on credit.

Lenders must make the terms and costs of loans “freely and publicly” available on their websites and at their premises to enable easy shopping around.

The Pretty Penny website does show that for a $200 loan, there will be a $24 account set-up fee, plus a $64 establishment fee. It also calculates what your payments would be each week, fortnight or month.

But it does not give a total of what those payments would add up to.

Mr Swanepoel said the trend of late was to argue that payday lenders took advantage of the poor and desperate in society, using predatory lending techniques to trap people in a cycle of debt.

“Pretty Penny Loans finds that practice abhorrent and its policies are purposely structured to ensure that this does not inadvertently occur in its business.

“In fact, even if a person borrows from Pretty Penny Loans and defaults, we do not default the non-paying customer’s credit rating.

“This practice would seem hard to believe, as most entities in the small loan sector use these sorts of practices to threaten and force clients into payment options. Pretty Penny Loans has no need to resort to these practices.

“Our customers understand the value and importance of having an emergency cash service available for those times where they run into a little trouble financially.

“Those customers are more than happy to ensure repayment in order to ensure the ability to use our service in the future,” he said.

Be aware of what you are signing

Mrs Thompson said people should make sure they knew what they were signing up for. Christmas was especially hard for people who often found themselves vulnerable and desperate.

“If people need help, please go to Gisborne Budget Advisory Service in Cobden Street and they will help you out and look at contracts.”

The Gisborne office reopens on Monday.

Consumer Affairs Minister Craig Foss said in May 2014 that key changes to legislation would increase protection from loan sharks and include requiring responsible lending in the consumer credit market.

That meant lenders must act with skill, care and diligence in all dealings with a borrower throughout the life of a consumer credit contract, he said.

Mr Swanepoel acknowledged that their product was not cheap considering the size of the loans provided.

“However, regardless of the size of the actual loan, Pretty Penny Loans complies with all responsible lending and other requirements under the Credit Contracts and Consumer Finance Act (CCCFA).

“We are big supporters of regulation and believe that strong regulation is essential to ensuring a viable and clean lending industry.

“However, there are real costs involved in complying with these requirements and little alternative but to pass them on to consumers via fees and interest.”

A NEW lady is in town to help with finances and her name is Pretty Penny.

An advertising flyer depicting a cartoon lady with a blonde bob, pink heels and short skirt, who says she can help you, is a cash loan company charging annual interest rates (AIR) of up to 365 percent.

Gisborne residents found the flyers offering quick cash loans from $50 to $300 in their letterboxes last week.

NZ Federation of Family Budgeting Services national president Carmel Thompson said it was one of the highest interest rates she had heard of.

A $200 cash loan from Pretty Penny, repaid over eight weeks, will cost you $472. That is 136 percent interest over the two months.

If you want to pay it back quicker, say one week later in a lump sum, that will cost you $323, or interest of 61.5 percent for your original $200.

Pretty Penny operates under QUADSAA Pty Ltd, an Australian company that registered in New Zealand six months ago with a Christchurch address.

The call centre is in Queensland and staff shied away from using the words “interest rates” but instead refer to “fees” and “charges”.

Pretty Penny Loans spokesman Mark Swanepoel said they did not shy away from advertising their AIR is 365 percent.

“When compared to large players in the short loan industry, you can see that such a rate is very competitive — see savemybacon.co.nz with an AIR of 547.50 percent, paydayloan.co.nz with an AIR of 502 percent to 602 percent,” he said.

Short-term loans

Pretty Penny touts short-term loans and you don’t need a job to apply. Just one of three things — a job, a phone plan or a guarantor — is all the company requires.

New laws introduced in June gave the Commerce Commission more power to protect vulnerable New Zealanders when they borrow money or buy things on credit.

Lenders must make the terms and costs of loans “freely and publicly” available on their websites and at their premises to enable easy shopping around.

The Pretty Penny website does show that for a $200 loan, there will be a $24 account set-up fee, plus a $64 establishment fee. It also calculates what your payments would be each week, fortnight or month.

But it does not give a total of what those payments would add up to.

Mr Swanepoel said the trend of late was to argue that payday lenders took advantage of the poor and desperate in society, using predatory lending techniques to trap people in a cycle of debt.

“Pretty Penny Loans finds that practice abhorrent and its policies are purposely structured to ensure that this does not inadvertently occur in its business.

“In fact, even if a person borrows from Pretty Penny Loans and defaults, we do not default the non-paying customer’s credit rating.

“This practice would seem hard to believe, as most entities in the small loan sector use these sorts of practices to threaten and force clients into payment options. Pretty Penny Loans has no need to resort to these practices.

“Our customers understand the value and importance of having an emergency cash service available for those times where they run into a little trouble financially.

“Those customers are more than happy to ensure repayment in order to ensure the ability to use our service in the future,” he said.

Be aware of what you are signing

Mrs Thompson said people should make sure they knew what they were signing up for. Christmas was especially hard for people who often found themselves vulnerable and desperate.

“If people need help, please go to Gisborne Budget Advisory Service in Cobden Street and they will help you out and look at contracts.”

The Gisborne office reopens on Monday.

Consumer Affairs Minister Craig Foss said in May 2014 that key changes to legislation would increase protection from loan sharks and include requiring responsible lending in the consumer credit market.

That meant lenders must act with skill, care and diligence in all dealings with a borrower throughout the life of a consumer credit contract, he said.

Mr Swanepoel acknowledged that their product was not cheap considering the size of the loans provided.

“However, regardless of the size of the actual loan, Pretty Penny Loans complies with all responsible lending and other requirements under the Credit Contracts and Consumer Finance Act (CCCFA).

“We are big supporters of regulation and believe that strong regulation is essential to ensuring a viable and clean lending industry.

“However, there are real costs involved in complying with these requirements and little alternative but to pass them on to consumers via fees and interest.”

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rachelle - 2 years ago
Who are these people? There seems to be a lot of loan companies lately. Do they do what they say?

Anonymous - 1 year ago
From the date 23/08/2017 I have made nine payments of $55.60 which is almost $500 for a loan of $150. I still have a few payments to cover $149 until the loan I borrowed is covered. I know this is very personal information but am not bothered because I do believe the interest is too high. I know now not to apply for a loan from this company or not to get a loan at all. But I am just here sharing my story in regards to anyone else considering getting involved with this company. I believe they charge daily as well, and if you want to postpone payments it's a $10 fee plus daily interest. If I knew the company was this ratshit I wouldnt have bought my car but thank you guys - please don't borrow from these people.

Dave Thompson - 1 year ago
I would have thought that the Reserve Bank would put a limit on lending rates. Payday lenders and the like shamefully predate on our most vulnerable under the guise of providing a quality financial option for emergency situations. Make no mistake, this is business exploitation to make money at the expense of disadvantaged people, and is far more widely spread than just loan sharks. Even NZ radio stations, in our faces, have promoted this loan-sharking practice.

Milasa Tamapeau, Auckland - 1 year ago
I have just caught up with this today because I wanted to borrow and I was told that $100 I borrowed on 10/4/2014 was now $760. I didn't know I owed them money!
How confusing can it be? Pretty loan-money ads on Facebook from $200, just apply.
I emailed them to confirm to me the contract that I signed for this, so now a waiting game.