Aim is to keep low-income families away from loan sharks.
Low-income families in Manukau City and Waitakere will be able to loan money under a Community Finance pilot scheme launched by Social Development Minister Paula Bennett today.
Under the scheme, people will be able to apply for a StepUP low-interest loan at their local branch of The Salvation Army and will be supported over the lifetime of the loans with financial education.
“Community Finance will help people with borrowing for assets they need for employment, education and a better quality of life,” Mrs Bennett said.
“Too many people on low incomes feel they have no other option but to borrow from unethical lenders who overinflate their prices and charge exorbitant interest.”
The Bank of New Zealand-backed loans offer discounts from market interest rates.
“They are also free of traps such as fees (often hidden in the small print) and savage penalties, which other, less ethical, lenders charge,” Mrs Bennett said.
See what Consumer NZ has to say about responsible lending.