Affordable loans for low income familiesSocial Development
Social Development Minister Paula Bennett today officially launched a Community Finance pilot scheme that will see StepUP low-interest loans available in Manukau and Waitakere.
“Community Finance will help people with borrowing for assets they need for employment, education and a better quality of life,” says Mrs Bennett.
“This is another way we are helping families to help themselves become financially independent, by offering sustainable borrowing that avoids spiralling debt.”
“Community Finance is an excellent public-private partnership between the Bank of New Zealand, Good Shepherd New Zealand, The Salvation Army, and the Ministry of Social Development.
“Together, our aim is to help low-income families and individuals build up their asset base and achieve greater financial knowledge and skills. 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 first Community Finance product is StepUP loans for cars and other goods and services, which are now available to people on low incomes in Manukau City and Waitakere.
“The Bank of New Zealand-backed loans offer good 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.
“The scheme has begun with a one-year pilot in South and West Auckland with the Ministry of Social Development contributing to the running costs of the not-for-profit organisations that provide the backbone and borrower support roles. No Government capital will be loaned directly to borrowers.
“People can apply for the loans through the two local branches of The Salvation Army and borrowers will be supported over the lifetime of the loans with financial education,” says Mrs Bennett.