THE Salvation Army says predatory lending practices and payday loans that make it difficult for residents to afford necessities such as food must be stopped.
The Salvation Army has called for the promotion of pay day lending and consumer leases to be restricted to mark Anti-Poverty Week, .
The group said it was vital people had access to loans they could actually pay back.
The Salvation Army runs a free and confidential Moneycare program and is one of the largest providers of financial counselling and related services in Australia.
Head of Moneycare Tony Devlin said restricting promotion of payday lending would lead to better outcomes for people who are in financial distress.
“Every day our financial counsellors see people experiencing financial hardship because they have had to resort to payday loans or consumer leases,” he said.
These loans often take up a large proportion of our client’s income, which can make it difficult for them to pay for necessities like rent and food.
“The saturation of payday lending and consumer lease advertisements has normalised this risky and expensive form of lending.
“Through the promotion of safer alternatives and restriction of these risky types of advertisements fewer people will be exposed to predatory lending and misleading practices.”
Mr Devlin said financial counsellors and no interest loans schemes (NILS) were always better alternatives to payday loans.
“People often acquire payday loans or consumer leases when they are in a financially desperate situation,” he said.
“However, increasing the levels of debt at increasingly high interest will usually only exasperate the problem.”