Loan scheme for car buyers

More than one million families will be eligible for low and no-interest loans for essentials, including buying and repairing second-hand cars. The government-backed scheme aims to help low-income families who are targeted by loan sharks. The Community Finance Scheme, launched by Social Development Minister Paula Bennett in Manukau today, starts with $10 million in initial finance from the Bank of New Zealand and a small government subsidy for administrative costs. There will be two schemes on offer. One is a no-interest loan scheme of up to $1,000 for up to 18 months from early September. The other is the set-up loan of between $1,000 and $5,000 for up to three years at 6.99 per cent interest from today. The finance will be available to people who qualify for a community services card and can’t borrow from mainstream banks, but can provide bank statements or other proof they can repay the loans. In June, there were 913,450 families with community service cards. Access to the scheme will be provided through the Salvation Army on a pilot basis in Manukau and Henderson in Auckland, where many of its clients have been paying loan-shark interest rates between 10 and 520 per cent a year.