A new service has been launched in New Zealand allowing people to apply for short-term loans via their mobile phones.
However, consumer advocacy groups are expressing concern that the interest rates are extremely high, and poorly disclosed.
Ferratum Group, a Finnish firm, is offering the service, saying New Zealanders will be provided with a "quick-fix solution to urgent financial problems.”
After registering online, borrowers can text the company for loans of up to $200 for first-time users and up to $600 for regular customers.
Ferratum New Zealand’s Richard Yoon says the funds will arrive in the borrower’s account in as little as four minutes.
"If you were in a supermarket with a trolley full of groceries and your Eftpos card was declined, literally within a couple of minutes of sending us a text you could have funds available to complete the purchase,” Yoon says.
However, with kiwis already owing over $12 billion collectively on high-interest loans such as credit cards, some commentators have suggested the service will do more harm than good.
The interest on the Ferratum loans reaches 292% p.a. for a $100 loan over 30 days, according to Interest Rates.
Website publisher Philip Macalister says the service encourages people to "treat money like it is something that grows on trees.
"It’s like send a text and free money appears in your account. To find out what the interest rates are users have to read through an 18 page terms and conditions document. This is not the easiest thing to do on a mobile phone.”
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