Women who fell prey to 'predatory' lenders break the loan cycle

Wednesday, 27 June 2018

Lisi Laulapapa, left, and Donna Rawiri are both victims of high-interest money lenders.

Donna Rawiri says she could have bought a house with the money she's paid to 'predatory' lenders.

Rawiri has paid at least $100,000 in loans, interest and fees to lending firms and mobile trader trucks over the past 32 years.

She used the money to upgrade material items, and as a treat for her children.

'Once the loan was paid off, I would get sucked back in and that's how I led my life.'

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Rawiri is one of a number of people who have fallen victim to what Consumer Affairs Minister Kris Faafoi describes as 'predatory' lenders.

On Wednesday, Faafoi unveiled proposals to cap the amount lenders can earn off loans in an attempt to reduce the damage they do in poorer communities.

Rawiri's first loan was for a car, when she was just 16 years old. At the time, she was receiving an unemployment benefit.

The loan was $8000, but that quickly ballooned to $12,000, she said.

However, she continued to go back and rack up more debt, until it became too much to manage, and she sought help.

'It wasn't until I came to The Salvation Army that I realised, 'What a dummy'. The reality, for me, sunk in then.'

Consumer Affairs Minister Kris Faafoi unveiled a proposal on Wednesday to cap the amount lenders can earn off loans.

'I came to realise, 'Far out, all those years I've wasted all of that money',' Rawiri said.

'I probably could have owned a home.'

Loan sharks were 'rip offs' who preyed on low income families, she said.

'For me, I've learnt, but I'm one of the lucky ones, because how many other families are out there that don't know? I feel for them.'

Another loan shark victim, Margaret Brown, said she started borrowing money to fuel her drug, alcohol and gambling addiction.

She would lie about how much money she was earning to get a bigger loan, she said.

It took her quite a few years to break the cycle, and start to turn herself around, Brown said.

'I was buying drugs over food, but I realised food needed to come first.'

Brown met with the people at Newtown Ethical Lending Trust, a charity which provides interest-free loans to help people in need.

At that point, she also gave up gambling, drugs, and alcohol.

'I had to change my life around, because it's not going to help the young ones. I may as well make a difference for myself and my future.'

Porirua woman Margaret Brown borrowed thousands of dollars from finance companies to fuel her gambling problem.

While some responsibility fell on the lenders, some also fell on the people borrowing money, she said.

'It's not really their [lenders'] fault, it's our fault. We are the ones saying, 'It's for this and that', they are just doing their job, and we've got to think, when we ask for loans, what do we really need it for? Is it to pay off a bill, or create a bill?'

Brown hoped to be debt-free by the end of next year.

She had one loan left to pay, and had stopped borrowing money from lenders, she said.