Families borrowing from “subprime lenders” are loading up on buy-now-pay-later products and credit card debt just to cover their essentials.
Shares in Cash Converters have surged after it settled a class action suit accusing it of effectively charging rates of over 175 per cent on short-term loans.
After a $22.5 million profit last year,the pawnbroker and payday lender is expecting losses this financial year led by a hefty class action payout and bad debt write-offs.
A Cash Converters customer obtained 20 small loans from the group over a year and at one point had eight loans on foot simultaneously.
Payday lenders and Afterpay will be the subject of a new Senate inquiry into parts of the finance sector that have escaped the Hayne royal commission.