Proposed changes to legislation for small amount credit contracts (SACC) could have a big impact on the lives of many Australians who use small loans to manage unexpected expenses. Here’s what you need to know about the changes that are being put forward. There could be big changes to small loans that might affect you.
Small loans are a big lifeline.
Today, around 3 million Australians – or almost 17% of the adult population – are partially or fully excluded from obtaining credit from banks. That means no credit cards, personal loans, car loans or mortgages. For these people, small loans can be a lifeline.
However, if proposed changes to legislation are passed, these loans could be more difficult to obtain. And more expensive to repay. If you have previously used a personal lending service like City Finance you may be directly affected by the changes.
So, what are the proposed changes?
The legislation will aim to limit the amount that customers can repay on small loans. While that may sound okay in theory, it could push customers into borrowing more than they need. When customers take out larger loans with longer terms – it means they will have to pay more back in total.
In fact, estimates suggest that a small loan of $1000 will be between 20% – 55% more expensive for customers if the new laws are passed.
This will pose problems for customers that rely on small loans to manage unexpected everyday costs. Things like washing machine repairs, replacement tyres or sudden dentist bills.
At City Finance, we are proud of our lending practices and the role we play in helping customers stay on top of their finances. These proposed laws are nothing more than an attempt to prevent people manage their money as they see fit.
By limiting the options available, customers may be directed into larger, longer loans. Or into unregulated loans from disreputable providers. And that could hurt the very people the laws are supposed to be helping.
If this is a subject you will strongly about, why not sign this petition and let the government know how you feel. Every signature counts – so sign here if you think the proposed laws will have a negative impact on your budget, and your lifestyle.