The Consumer Action Law Centre has today initiated legal action against Amazing Loans on behalf of a client who was required to repay a total of $7,835.36 for a $3,000 car loan, thanks mainly to an exorbitant loan advance and administration fee.
‘I was totally amazed by the lending practices of Amazing Loans’ said Consumer Action solicitor Gerald Cohen.
‘Amazing Loans claim to charge low interest of 7% on their loans, but they whack their clients with large fees’, Mr Cohen said.
‘The loan advance and administration fee for this particular loan was over $4,500. For a two year, $3,000 car loan, that amount is exorbitant – some would say amazing’, Mr Cohen said.
‘Amazing Loans also engaged in unfair tactics by advising the consumer to consolidate an unrelated debt into the loan – a small outstanding debt to an electricity company. This debt was not previously subject to fees or interest charges and simply enabled Amazing Loans to profit further from the consumer’.
‘This is certainly not the first time that we have taken action against this fringe lender for taking advantage of low income earners with ridiculously high fees’, Mr Cohen said.
Amazing Loans commonly takes advantage of vulnerable consumers by charging expensive fees for providing small loans, often to consumers who cannot access credit elsewhere due to defaults listed on credit reports.
‘In this case, Amazing Loans provided the loan, despite the consumer being reliant on the single parent pension and due to their circumstances would not be able to meet the obligations of the loan without substantial hardship’, said Mr Cohen.
‘Ironically, our client may have been able to afford a loan on fairer terms – it is the excessive fee that means the monthly payment is double what it would be with a reasonable interest rate’.
‘We’re calling on the Federal Government, through its proposed new consumer credit laws, to prohibit payday and other fringe lenders from charging exploitative fees for small loans. Such practices do not help consumers out of a tight squeeze, but can lock them into ongoing debt problems’, said Mr Cohen.