By DIANA CLEMENT
Anyone visiting the website
could be excused for thinking the "wage advances" (otherwise known as loans) on offer are a great deal and the website's call centre is staffed by people who just want to make your life easier.
Prospective clients might even be impressed by the easy-to-read fine print. But there's a catch to these loans.
Cantwait.com charges 729.96 per cent interest a year on its loans. If you are late, your repayments will be loaded with missed-payment fees.
For people who can chuck an extra few thousand dollars on the mortgage when extra cash is needed, the idea of paying 40, 50, 60, or even 729.96 per cent interest to such lenders of last resort, otherwise known as loan sharks, is difficult to comprehend.
But the shark schools in poorer urban areas of New Zealand can mean children go hungry because parents are too frightened to miss payments, says Consumers Institute chief executive David Russell.
"It is not being emotive," he says. "Families with dependents are the prime targets for loan sharks.
"Many borrowers will pay the loan sharks before buying food, clothing or shoes. I am sure children go hungry [as a result]."
Cath McFadden, of the Citizens Advice Bureau, describes a loan shark as: "A personal finance company that takes advantage of people who can't get loans elsewhere and charges very, very high interest rates."
So how much is too much interest? The BNZ, which is typical of most mainstream lenders, charges between 7.5 and 15 per cent on personal loans, depending on the level of risk and the security.
Hire purchase firms charge about 20 per cent. Anything above this is unacceptable, says Raewyn Nielsen, executive officer of the Federation of Family Budgeting Services.
Russell says: "In my book, anyone charging over 25 per cent is in the shark training pool. More than 35 per cent and you are a free-ranging white pointer. Of course, rates are related to risk. A short-term, unsecured loan will inevitably attract a hefty interest rate."
But the interest rate is not the main concern for Nielsen, who negotiates with loan sharks on behalf of clients. The finance rate, which includes all sorts of hidden charges, can amount to $700 on a $1000 loan.
Last-resort loans are often organised by brokers, whose "arrangement" fees are loaded on top of the loan.
Loan sharks argue that their charges cover the higher risk they face.
Anyone can set up as a lender in New Zealand as there is no licensing process, and it's quite legal to charge hefty interest rates.
From April 1, lenders will have to comply with the new Credit Contracts and Consumer Finance Act and provide adequate disclosure of their charges. The Commerce Commission will police the act.
But consumer groups say the act lacks bite and will not rein in the most unscrupulous lenders.
Typically, loan sharks have rosy offerings that tempt desperate people. Cantwait.com sounds like a friendly place to do business.
"Need a new loan?" its website asks. "A friendly customer service operator will call you within minutes."
Many lenders of last resort advertise on television and radio, inviting people who have been turned down elsewhere to contact them. If you live in a poorer suburb, your letterbox and local newspapers are probably full of ads for instant credit.
Loan sharks typically encourage existing debtors to recruit new ones.
Cantwait.com's "Refer a Mate" campaign sounds enticing on the surface: "Check this out. You borrow $100 for seven days at the same time you refer a mate, you end up paying only $4 for the seven-day advance (because you receive $10 for the referral), and if you were referred by someone else in the first place then you end up paying nothing in fees.
"We actually end up paying you $6 to borrow off us!"
Sadly, says Nielsen, many such loans are taken out to pay off other loans or gambling debts. For most clients of loan sharks, there is no alternative lender. Although the banks say they do not discriminate against beneficiaries, it is difficult to prove that you can repay a loan unless you have a regular wage. Self-employed people often turn to loan sharks when the going gets tough.
In the case of Pacific Islanders, banks "often don't understand the need to send money to family when a natural disaster such as a cyclone hits", says Nielsen.
The only other option is to approach groups such as Citizens Advice and the Federation Of Family Budgeting Services for free advice. But many families face a hard slog to climb out of the financial hole they have dug for themselves.
As with dieting, it's easy to know what's best for you. But resisting temptation to eat another doughnut or take out a loan for a short-term need is another story.
One of the biggest concerns about last-resort lenders is that their huge charges are often disguised.
Cantwait.com never uses the words "interest rates". It talks of a "finance charge", which is quoted as a dollar figure, not a percentage. So if you borrow $100, you pay a "finance charge" of $14 every seven days. To many that would sound manageable.
Lenders will take greater security than they need to cover the loan. Borrowers often secure their homes against loans of $5000 or $10,000 and a handful lose their houses every year as a result, says Nielsen.
Citizens Advice also complains that loan sharks advertise in several languages, but the contracts are always in English and often not understood by the borrower.
The fact is that lenders do not want borrowers to repay their loans. Many loan sharks keep their clients in a permanent state of debt by offering a line of credit.
For help with debt problems contact:
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This summer will be critical to discover if the sharks have started returning.