Loan Sharks Law
Loan sharks are not above the law. This is despite the fact that they resort to unorthodox methods of debt collection in the event of default. These methods include intimidation,blackmailand even violence. Any loan sharks who resorts to these methods is breaking the law.
No Legal Rights
Some loan sharks scare defaulters by claiming one will be prosecuted and sent to jail. However, this cannot happen as they have no legal right to recover the debt because it is illegal.
Ways Loan Sharks can help
You can easily get payday loans by Loan Shark and there are several ways by which they will help you with your payday loan
LAWS GOVERNING LOAN SHARKS IN NEW ZEALAND
Some law changes were effected to control loan sharks in order to protect the many citizens of New Zealand who are struggling with spiraling debt. However, these law changes are not working as they are meant to. Statistics indicate that every year, about sixty thousand people go to budgeting services around the country for help, with an average debt of ten thousand dollars.The government of New Zealand is in the process of the reviewing the Credit, Contracts and Consumer Finance Act.
CONSUMER FINANCE ACT
PURPOSE OF THE ACT
The purpose of the Act is to ensure that when one is about to access credit from any person or organization, the borrower is able to make informed choices by having all the information they require about the credit facility, they are fully aware of the terms and conditions of the loan and that they are able to keep track of all the aspects of their loan such as interest rates and fees charged on the loan.
REQUIREMENTS OF LOAN SHARK
This requires lenders to act responsibly in order to abide by the law. This includes providing all the necessary information to borrowers, drafting their terms and conditions in a simple and clear manner and being open about the interest rates and charges that they levy on loans.
LENDER RESPONSIBILITY
This law is the lender responsibility code which requires lenders to be reasonable and ethical in their dealings. This includes checking if a borrower can afford to make the repayments on the loan given to them.
INFORMATION
When a borrower is applying for a loan, they will provide information such as their salary, bank statements and any other loans they may have with other lending institutions. They will also state how much they want to borrow and their preferred repayment installments
BORROWER ELIGIBILITY
Loan sharks should be able to use this information to discern whether a borrower can afford to pay back the loan they are about to borrow. This is however not the case. Loan sharks will advance loans to borrowers with the knowledge that one cannot possibly afford to pay back the money. Hence once the loan is due and the loan sharks comes to collect their dues the borrower will borrow more money to pay this loan. This creates a never ending cycle for the borrower. The Act is working to prevent such scenarios.
HELPING THE DESPERATE
Loan sharks should also help the borrowers to make informed decisions. This is by way of providing all the necessary information to the borrowers. This includes advising them on reasonable amounts to borrow, advising them to seek credit facilities for money making ventures and not to fund expensive or destructive lifestyles
LOAN CONTRACT
The loan contracts also contain language that is too complicated for the borrowers to comprehend. And since at the time of borrowing a loan from a loan shark one is often in urgent and serious need of cash, most borrowers do not take time to thoroughly go through the contract hence they agree to a lot of terms that they are not aware of.
INTEREST RATES
information such as the very high interest rates comes to light when they default on the loan and it is revealed to them that they agreed to some terms when they were requesting for the loan. It’s the duty of the loan sharks to make the borrower understand what they are legally binding themselves to. Also, most of the time they are only borrowing small amounts of money hence they do not see the need to go over the lengthy contracts into detail
COMMERCE COMMISSION
The Crackdown
The Commerce Commission carried out a review of more than 200 lenders’ websites, checking their compliance with disclosure rules. It found that one in five lenders had potentially failed to comply with one or more of their obligations, and interest rates varied from no interest at all, all the way up to 800 percent. It was now clear that the changes made to the lending laws weren’t working.
There are suggestions for the Commerce Commission to crack down on lenders who were breaking the rules.Non-compliant loan sharks would be banned from the industry completely. This is intended to provide better protection to the borrowers.
CHANGES TO CONSUMER FINANCE
The Commerce Commission is proposing to make changes to the Credit, Contracts and Consumer Finance Act. Among these proposed changes, is to make it illegal to lend someone money whose loan repayments would be likely to result in substantial hardship.
DISCLOSURE OF LOAN TERMS
The changes would also require complete disclosure of loan terms and extending the period during which borrowers can cancel their loan. These changes will also include meetings with community and consumer groups in order to better understand their needs as borrowers
LOAN SHARK LENDING
Meeting with members of the lending industry are also necessary. This is because some of the lenders are also calling for changes like these to help rid the industry of those who give it a bad name.
Loan sharks should provide better controls against misleading, deceptive or confusing advertising.
CHANGES TO THE LAW
NON-COMPLIANT LOAN SHARKS
One of the measures to be taken against non-compliant loan sharks is that borrowers won’t have to pay the cost of interest or fees if their lender is not a registered financial service provider.
DISCLOSURE OF LOAN TERMS
The changes would also require complete disclosure of loan terms and extending the period during which borrowers can cancel their loan. These changes will also include meetings with community and consumer groups in order to better understand their needs as borrowers
FINE
Another is that a penalty of up to six hundred thousand dollars would be imposed on irresponsible loan sharks who target vulnerable families.
A cap will also be introduced on interest and fees of high cost loans. This will prevent people from accumulating large debt from a single small loan.
“CHANGES TO THE LOAN SHARK LAW ”
