Micro loan scheme eases pressure on battlers

High-interest loans for emergencies can place families under pressure (Facebook/Good Shepherd Microfinance)

Tasmanians struggling to pay for emergency household expenses will now have access to a low-cost alternative to small, short-term loans, ABC News reports.

Not-for-profit organisation Good Shephard Microfinance has launched a trial of its new, low-cost, short-term cash loan — Speckle — for people struggling to meet high market rates. Applicants must earn a minimum of $30,000, not including government benefits, to access the loan.

Father-of-four Daniel Whipps, 37, who drives a taxi part time, said the last short-term loan he took out charged 23 per cent interest.

"We had to borrow some money to quickly get an air-conditioner because of the heat," he said.

"You can't exactly save up for something like that quickly and, unfortunately, you pay 23 per cent interest on it."

Mr Whipps said he ended up paying double the price of the air-conditioner. He said the pressure of debt could be extremely stressful for people on low incomes.

"Every time you have debt it's pressure on you — when you're on a low income like I am, you have to make sure every dollar counts," he said.

Good Shephard chief executive Adam Mooney said Tasmanians resorted to high-fee credit more than the rest of Australia.

Between 2012 and 2015, 22 per cent of Tasmanians used high-fee credit compared with 7 per cent nationally, he said.

Mr Mooney said his program offered loans between $200 and $2000 with a 10 per cent establishment fee and 2 per cent interest per month, which was half the market average.

"We know people need access to emergency cash to pay for household expenses like children's needs, car repairs and other essential items," Mr Mooney said.

"Speckle offers a low-cost alternative for people who can repay a cash loan."

Mr Mooney said while 2.4 million adult Australians were facing some level of financial stress Tasmanians were doing it toughest, having the lowest median weekly income in the country.

"Scarce family resources that should be invested in nutritious food, education and recreational pursuits are being diverted away from that and spent on servicing very expensive debt. People are moving from that hardship position ... to crisis."


Low-cost, short-term loans trialled to help struggling Tasmanians avoid high-interest credit (ABC News)

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