Bankrupt loan shark fined for consumer credit law breaches
"People like this guy should be thrown into shark infested waters. He'd be among family."
Featured commentBUSINESSDESK: A bankrupt loan shark who charged interest on loans of as much as 1738% has been fined in the Christchurch District Court for breaches of consumer credit law.
Barry Hunt was fined $18,532 plus court costs of $1461.79 after being prosecuted by the Commerce Commission over 15 loan contracts with 11 different debtors between September 2006 and August 2007.
Among breaches to the Credit Contracts and Consumer Finance Act, the contracts failed to give the full name and address of the lender and Hunt used a range of business names, none of which were legal entities, the commission said in a statement.
He was an undischarged bankrupt at the time.
The contracts also failed to specify annual interest rates, instead giving rates “significantly lower than was actually applicable” or giving a weekly or fortnightly rate.
“The actual interest rates charges ranged from 29.5% to 1738%,” the commission said.
“Third-tier lenders are dealing with the most vulnerable consumers” who may have been turned down for credit by first- and second-tier lenders and may be in a position where they accept “otherwise unacceptable terms and conditions”, the commission said.
“It is reprehensible that such lenders will take advantage of these consumers in the way Mr Hunt did," competition manager Stuart Wallace said.
Back to home
Back to top
Print
Latest
NBR SERVICES
SUBSCRIPTIONS
Sign up for NBR subscriber content or email alerts
Comments and questions3
People like this guy should be thrown into shark infested waters. He'd be among family.
While those are sky-high interest rates, if it's the choice between expensive credit and no credit, who are we to tell others what to do? As a believer in personal liberty, who am I to deny people the free choice to undertake such borrowing, even if seemingly usurious? I'm sure some of the borrowing will be frivolous, but some won't. Also, think about the 'unauthorised overdraft fees' the banks will charge you - $10 in the red can sting you with a $10 fee. That's a pretty steep rate, especially if repaid the next day.
Let's assume here you need to borrow $400 for two weeks, and El Pronto Loans quote you 25%pa plus a $50 admin fee. Your total repayment cost will be $453.85 two weeks later. Sounds reasonable to me. BUT! Cost of credit is actually 350%pa! Just shows that the total cost of credit when expressed as a percentage is meaningless.