Interest-free loan option helps prevent vulnerable people from falling prey to ‘dangerous’ lenders


Single mother Tina Edwards was desperate for a loan to pay for her three-year-old son’s surgery, but her options for getting approved quickly were limited.

The 44-year-old dance teacher used to run her own studio, but is currently unemployed and paying Centrelink’s sole parent in the Logan area, south of Brisbane.

Edwards’ son, Cooper, suffered from severe sleep apnea and had to have his tonsils and tonsils removed.

“His sleep apnea got worse and so did his behavior,” she said

“It was hyperactivity during the day, loss of appetite, very tired, listless, no energy – very sad for a little three year old.

Mrs. Edwards opted for the private health system, but the surgery would cost nearly $5,000 — and even with some money saved, she had to borrow $1,500.

Given her financial situation and short time frame, she looked at the limited options available to her – going to a lender who would have to pay high interest or accessing a No Interest Loan Scheme (NILS) through a community center.

Ms. Edwards found the Logan East Community Neighborhood Association that was able to quickly provide her with an NILS and is now repaying the loan through Centrelink, saving her from having to resort to a lender.

“I couldn’t wait any longer, not when it comes to your child’s health,” said Mrs. Edwards.

“I’ve looked at others” [payday] loans, but I was more concerned about the repayments at such a high interest rate – I don’t know how people in my situation would be able to repay those amounts.”

Gillian Marshall-Pierce goes through documents in an office with Tina Edwards and her three-year-old son Cooper.
Gillian Marshall-Pierce, with Tina Edwards and her son, said the online and in-store payday sector was targeting low-income people.(

ABC news: Rachel Riga


Payday lenders ‘prey’ on communities

Payday loans — also known as small amount credit contracts, cash loans, or quick loans — are expensive, short-term loans of up to $5,000, repaid over a period of 16 days to a year.

Gillian Marshall-Pierce, of the Logan East Community Neighborhood Center, said online and in-store: payday sector targeted low-income people.

“Interest rates can be huge and people often don’t understand what they’re signing.

“You can just really need a refrigerator or need something and then you pay a $400 management fee, 46.7 percent interest, and a $3,000 loan can easily turn into a $10,000 loan.”

Ms Marshall-Pierce said the high repayments and the short borrowing period sent many people into a debt spiral.

“We see people living in survival mode from paycheck to paycheck and just not having enough to put food on the table or savings,” she said.

“People who are already struggling can’t repay that loan, so they can go out in desperation and get another loan to get that original spot off their backs and it creates a complicated financial situation.”

A report by the Stop the Debt Trap Alliance, a national coalition of more than 20 consumer advocacy groups, shows the industry is booming in Australia, with an estimated gross of $1.7 billion in 2019.

The report shows that between April 2016 and July 2019, approximately 1.77 million Australian households took out more than 4.7 million individual personal loans worth approximately $3.09 billion.

Tina Edwards and her three-year-old son Cooper
Tina Edwards said her son would have waited about three years for surgery in the public health system.(

ABC news: Rachel Riga


More support for interest-free loans

No interest loans of up to $1,500 are available to those earning less than $45,000 and can be used to purchase essential goods and services.

Low-interest loans — also known as StepUp loans — range between $800 and $3,000 and repay in three years at an interest rate of about 5.99 percent.

The loans are managed by Good Sheppard Microfinance and are available through a variety of providers at 60 locations in Queensland.

Mark Henley, chief executive officer of the Queensland Council of Social Service (QCOSS), said the loan programs should be more widely available.

“It is a program supported by the state government, which needs to do more to ensure that people, particularly in regional Queensland, have access to it,” he said.

“The affordability of life is getting harder and harder, and payday lenders are getting more sophisticated in how they market and target people — it’s become an incredible problem.”

Ms Marshall-Pierce said the state government needed to expand the loan network to keep up with demand, and better community centers that are currently offering the loans.

“This isn’t just about geographic spread, it’s about boots on the ground to have those face-to-face conversations with people who are in financial trouble and those who have their best interests at heart — they won’t find that if they go to a lender.” “, she said.

“We have regional cities that have recently been hit by drought, floods, cyclones and natural disasters and some have lenders in their city and nothing else.

“The state government has an existing infrastructure footprint in Queensland and those are community centers – every regional city or center has one and it’s up for grabs as they invest in providing these loans and changing lives.”

Gillian Marshall-Pierce smiles at the camera as she sits at a desk with a computer behind her.
Gillian Marshall-Pierce said the state government needed to expand the network of no-interest loans to keep up with demand(

ABC news: Rachel Riga


Queensland Minister for Communities Coralee O’Rourke said the state government funded a $7 million financial literacy and resilience program each year to operate two low- and no-financial stores — Good Money — on the Gold Coast and in Cairns. and financial services to offer the state.

“We are currently working closely with the community sector because we know how important it is to have opportunities where people can access affordable products and financial aid so that we can cover all areas,” she said.

“If you are in an area that you don’t have access to, or know where to get support, please contact my department or contact Good Sheppard Microfinance.

“I really want to keep my door open to connect with the community organization. They have the solutions on the ground and we know government works better when we work with the community.”

Low and no interest loans are available at 60 locations in Queensland through Good Shepherd Microfinance.

Urgent reform needed

The federal government announced plans to tighten small consumer loan and lease laws in 2016 after an industry review.

The coalition accepted most of the recommendations and said it would introduce legislation with the reforms to parliament in 2017, but it was never tabled.

The federal government has since launched a Senate inquiry into the payday loan and consumer leasing sectors — which were not investigated as part of the royal commission on banking — that is now open for submission.

Mr Henley said the federal government is struggling to implement much needed reforms.

“Payday lenders are an area that is not well regulated and they target low-income people,” he said.

In a statement, Assistant Treasurer Michael Sukkar said the federal government was considering public submissions on the final reforms to ensure the right balance was struck.

“The government recognizes the importance of protecting vulnerable consumers of financial products, and is therefore pushing forward changes designed to improve consumer protection for small-value credit contracts and leases,” a spokesman said.

“However, it also recognizes that small value lenders and consumer leasing providers play an important role in providing credit to consumers who in many cases do not have access to mainstream forms of financing.”

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