Free Loans

Reporter: Rodney Lohse

As families sink into record levels of household debt, bankruptcy and credit default rates skyrocket, struggling Australian communities are seeing the emergence of financial white knights handing out free loans. Yes you heard right. Absolutely no interest and no catches. "There is no catch you just borrow the money" says Kerry Deller

"I cannot describe the sense of security" explains mother of three Koda Jo Berry. "I had begun to think no-one cared, it was all too hard". And mother of five, Kerry Deller, is a case study in financial salvation. Rescued by a lending scheme that required nothing more from her than what she borrowed. "I found myself single after 20 years of marriage and I had five children and it was something that I hadn't planned for in any way shape or form".

Surviving on welfare Kerry was about to abandon a university degree that was her only chance at a comfortable future. "The shame and the embarrassment and thinking whatever and one day when the car had broken down and I had raked every cent together to get my car back...without the car I couldn't go to uni and I just didn't know where to go or what to do...and out of the blue I got this phone call." The call was from a so-called community savings and loan circle. "We'll give you the $400 in a loan to get your car back and I just dissolved into tears."

Belinda Drew heads up non-profit organisation, Foresters Ana, which assists communities to establish the loan circles and other no interest loan schemes which offer an alternative to controversial high interest loans also known as payday loans. Loans which have a habit of emptying wallets, not filling them.

"They know they're not going to get done over...they're not going to be exploited and they are not going to be judged either and that's really really important to people" says Belinda. "All you have to do is join a local circle...put in $10 a month and after six months you can borrow money in times of need."

Mother of three Koda Jo Berry can joke about it now but it wasn't long ago she really didn't have enough money to feed her children. "I can remember this one particular day they asked for something really small but was at the end of my tether and I just didn't have it and I just turned and yelled and said stop asking me because when you asked me that, I feel so pressured and you know what its like and my child started crying and said I'm so sorry I didn't mean to hurt you and I broke down then. I felt inadequate".

Sydney father Mervyn Peka has used several no interest loans to pay for practical household reasons but he says the most important gift they have given him is the ability to educate his children.

A bit of myth busting needs to go on. People on low incomes can manage credit and they can also save money. It's just that they aren't always given the opportunity to do so.

And when they aren't the impact is devastating. In just the first three months of this year more than 6500 Australians applied for bankruptcy and across the nation, credit default rates soared. The worst, Tasmania, with an almost 60 per cent increase. In the Northern Territory it jumped by almost half. It was a similar story in Western Australia, Queensland and New South Wales. Not much better in South Australia and the ACT. Victoria coming in the best with just a 10 percent increase.

But compare that to the no interest community loans. There's never been an example out of those circles where anyone has defaulted on a loan and that's because it's built on relationships and trust.

These community loans are available in most capital cities and are generally for smaller amounts like cars and bills. Foresters ANA company behind these community loans can be contacted to find out if there is one in your area.

Well understood in other cultures. Belinda says "there's enormous power in people coming together to help themselves."

Belinda Drew

Foresters ANA Mutual Society Ltd


Tel: (07) 3210 6772