Loan interest to be capped at 100 percent 'still high' - Darryl Evans

Drive 10/10/2018
Photo: Stock.

New measures to combat loan shark lenders who charge high interest on small loans will be introduced by the Government.

There will be a cap on the total amount of interest and fees that can be charged by loan sharks.

"The introduction of an interest and fees cap on high-cost loans will prevent people from accumulating large debt from a single small loan," Consumer Affairs Minister Kris Faafoi said.

"For example, if you borrow $500 you will never have to pay back more than $1000 in total, including all fees and interest."

Loan sharks won’t be able to charge interest and fees larger than the loan itself. Lenders could be fined up to $600,000 for breaching responsible lender principles.

Darryl Evans, CEO of Mangere Budgeting Services Trust believes the changes will make a difference.

Mr Evans says for at least the 15 years he has been asking the Government to cap interest rates.

But he says the cap is still too much.

“A hundred percent, in my personal opinion, is still high. I would’ve liked to have seen it go lower in line with Australia, Ireland – where it’s around 48 to 50 percent, but this is a really good stepping stone,” he told RadioLIVE Drive.    

The new measures will come into effect from 2020.

Listen to the full interviews with Kris Faafoi and Darryl Evans above.

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