Cost of easy credit high
By the time he arrived at the Dunedin Budget Advisory Service, he owed more than $22,000. Soon after, he was declared insolvent.
Schouten's creditors include the University of Otago School of Dentistry, Motor Trade Finance and his bank, power and phone companies.
"It's scary," he says, describing how he felt as he sank further and further into debt.
"You blame yourself. You become angry with yourself. You feel like a fool.
"You become very anti-organisation because you see them as trying to either take money from you or preach to you about what you did wrong. You become isolated ... "
Like many New Zealanders, the 48-year-old ACC beneficiary has learned first-hand the dangers of debt.
But even his situation is not as bad as some others, with social agencies saying one of their biggest concerns is the so-called third-tier lenders hitting the most desperate with annual interest rates in three figures.
Such operators often lend money without ensuring borrowers can meet the repayments, they claim, then profit from the rapidly compounding interest and the subsequent seizure of assets.
Many of their customers do not meet the lending criteria set by trading banks because they have low incomes, a poor credit history or limited security.
The culprits include finance companies, payday lenders, pawn shops and mobile trucks.
Politicians share the social agencies' concern. Last year, then Labour consumer affairs spokeswoman Carol Beaumont launched a Stop Loan Sharks campaign, and last month the Government announced it would overhaul consumer credit laws to protect unwary customers being preyed on by unscrupulous credit companies.
Third-tier lenders are not as prevalent in the South as they are in places such as South Auckland, where there are 47 outlets and Mangere Budgeting Services staff recently saw a loan with an interest rate of 690%.
Payday Loan Education Student Loan Consolidation - News
The culprits include finance companies, payday lenders, pawn shops and mobile trucks. Politicians share the social agencies' concern. Last year, then Labour consumer affairs spokeswoman Carol Beaumont launched a Stop Loan Sharks campaign,
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Besides demanding improved regulation, some critics have called for a shake-up of financial education in schools. “While some people are able to make a balanced judgment about the cost of payday loans, others who are faced with the need for short-term
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