Payday lending has seen a recent upsurge in the Australian finance market especially with the consumer spending habits going up significantly. Statistics say that with the housing prices going down many Australians are known to be spending a lot of money on buying houses and other life necessities thus leaving very little or no money in savings. This has in turn lead to more people borrowing short term cash when some unexpected expenditure came up and hence the short term loan industry to experience the expanding market. According to reports approximately 13% of households have been known to have problems raising even $2000 a week while approximately 17% were known to suffer from at least one financial problem in one year.
Payday loan laws
Australian payday loans industry introduced a cap on the fees as well as interests lenders can charge from borrowers since July 2013. This cap was introduced for all small advances up to the amount of $2000 including a repayment term of 16 days to one year. Payday loans up to 15 days have been forbidden since March of that same year. These laws were basically passed to help debtors from falling prey to the fraud lenders in the market. Not all lenders are legitimate and some are there to take advantage of a borrower who may be in financial distress. With quite a few amendments in the payday loan laws of Australia, there were record changes made in the lending industry. However, the individuals who opted for short term loans were essentially the ones who suffered from elevated fees as well as rates for a lack of paying up on time. Most of the borrowers were trending from the lower income groups with majority of them lacking a credit card or any access to the more general option of bank loans. So these short term loans were a welcome relief for these debtors who were barely able to provide for themselves.
Protection for borrowers by the Australian payday legislation
Australian debtors are protected from unfair payday lenders through the National Consumer Credit Protection Act (2009) while also allowing them to file a dispute in case they find themselves in such a position. As a borrower you may be protected through this act and may be able to file a dispute in the following process:
You could submit a 'Financial Hardship Application with your lender.
You may like to go through a Financial Ombudsmen Service (FOS).
You may file a dispute with the Credit Ombudsmen Service Limited (COSL)
In case of an interview review, your lender should follow up with the internal dispute resolution.
You could also dispute using the Credit Compliance Monitoring Committee (CCMC)
The payday lending industry in Australia see changes quite frequently as there is a lot of ongoing discussion on how these loans affect the lives of people. Regulations are being laid down so that debtors do not spiral into overwhelming dues. There are more efforts put into giving debtors right to use to tools to calculate debts and rates and the related costs.
