Be careful with payday lenders

The article below shows the importance of understanding money; understanding why we do what we do around money as well as gaining financial literacy.  If more people understood money, the payday lenders would have fewer customers.

You might be interested in this from the ABC website:

Corporate watchdog ASIC is investigating a payday lender accused of lending to drug addicts, gamblers and people who are illiterate as well as changing the terms of loan contracts after they have been signed.

The ABC's Four Corners uncovered disturbing conduct by online lender Good2Go Loans, triggering an investigation by the Australian Securities and Investments Commission.

An insider has revealed numerous cases of irresponsible lending by the company, including lending to a person who was drug affected and another who could barely read or write.

"Someone would come in and you would know that they're visibly affected by drugs," the whistleblower said.

"I'd be told: 'It doesn't matter mate. That loan stacks up. Write the loan'.

"I've had someone with multiple payday loans from other lenders and it's clear they've got a gambling problem — they've got all these online gambling payments on their bank statements. They got the loan."

Four Corners has seen evidence that Good2Go Loans changes the terms of contracts which allow it to get around legislated caps on fees and charges.

After Good2Go Loans customers agree to a two-year repayment contract, the company sends out an SMS message with new terms including an increased repayment which shortens the duration of the loan.

The tactic allows Good2Go to avoid a 20 per cent cap on loan establishment fees set down in federal law.

One Good2Go loan, seen by Four Corners, included a $250 "establishment fee" on a $500 loan.

"The loan contract will say the loan's for 104 weeks, but 99 per cent of the time that doesn't happen," a whistleblower said.

"So once they email back to say 'I accept', we change it on them. We send them an SMS saying their new loan repayment amount.

"They're hoodwinked. They might've signed a contract saying they'll repay, say, $7 or $10 a fortnight, but then it's changed so they're paying back, say, $72 a fortnight.

"They weren't expecting that kind of repayment, so they might miss payments, payments might bounce, then come a whole range of dishonour fees."

Applicants' 'numbers fudged, budgets adjusted'

The law prohibits payday lenders from giving credit to customers who cannot afford it or where the repayments would cause substantial hardship.

But the insider from Good2Go Loans told Four Corners: "Basically the numbers are fudged. The budgets are 'adjusted'."

"The customer might tell you they spend $40 a week on smokes; you put down $10. You put down $5 for clothes so they can buy a T-shirt [then] they won't go clothes-less. We've been told that as long as there's an allowance in there, it's fine.

"The managers will try their darnedest to make the budget fit.

"There would be occasions where you just simply couldn't, but nine times out of 10 they'd make it work."

The insider said the attitude of the company's management towards customers was "total disregard".

"[Management thinks] 'f**k them, bad luck, just do what you've got to do, they're just f*****g Centrelink people, it doesn't matter', you know? 'They're bludgers'," the insider said.

Good2Go Loans did not respond to questions from Four Corners.

Are your finances a mess?

Do you want to change problem behaviours that leave you financially unstable?

People perceive, value and treat money differently.  But regardless of how you interact with it, money and your financial circumstances play a major role in your life.  Money can provide security, freedom and power and lack of it can leave you feeling inadequate and trapped in undesirable circumstances.

So why do some people seem to attract it, while others are unable to hold on to it?

Problematic patterns in how you think about and manage money are often related to painful emotions such as guilt, fear and anxiety.  Certain events related to managing your money—say opening your bank statement, paying bills or denying yourself small, but unnecessary luxuries– trigger an intense emotional reaction.

It is these overwhelming, painful emotions that lead to impulsive and destructive money behaviours.

How you do money is how you do everything.  For example, poor eating choices are typically a result of filling a hole or need with food.  People who overspend are often trying to fill that same hole with shoes or the latest video game.

Beliefs and Attitudes

Intense emotional reactions can be linked to your beliefs and attitudes about money. You may have learned from early experience the value of self-denial and self-deprivation in money matters.  Or maybe money was always taboo in your home.  Or you received messages that you should feel guilty about money (“only the poor go to heaven”) and that money was unstable and scary (“you could wake up poor in the morning”).

Escape

Attitudes that contribute to guilt, fear and anxiety about money can cause you to simply want to escape.

Money and denial typically go hand and hand.  Denial is simply refusing to recognize or acknowledge a situation.   This refusal to look at the situation has caused more people to create serious financial issues for themselves.  For example, when the bank statement comes in, instead of opening it you throw it in a pile where you will “look at it later”?   Do you often get into trouble because you don’t know how much money you have?  Or, the last time you deposited money into your savings account was when your grandma sent you money on your birthday (hint:  she’s been dead more than ten years).  These are all symptoms of money denial.”

Acceptance

Emotional intelligence– that is the adaptive regulation of emotions— is connected to a less pronounced orientation toward money and a greater sense of economic self-efficacy.

Acceptance, rather than avoidance, decrease the intensity of your emotional reaction to money, improving your emotional intelligence.  You can make a choice and turn towards, rather than away from your money problems.

Changing your financial situation requires you to be willing to look at all the ways in which you sabotage your financial stability. Being willing to look at these issues is liberating.  Because in that moment of saying, “yes, I am willing to look at this and figure it out” one becomes energized, motivated, and powerful.  You become a person standing in your power around money.  The more you are willing to go deeper and deeper, to peel back the layers of your Money BS, the greater the transformation.”