Payday loans and gambling

| January 30, 2018

When betting, sometimes it’s important to call “Time Out”. Always bet responsibly.

The racing industry is our passion, but it should always be fun and never should lead to financial stress. It’s not uncommon for gamblers to look for payday loans to fund their activities or to bet on spreads which is not too different from gambling. The payday lending market has grown considerably in Australia over the past decade. These loans generally offer a fast approval process and attract high repayments (generally 4% per month plus a 20% establishment fee) as well as other fees and chargers.

When gambling, you should come up with slots strategy like on casino to increase your chances of winning. It’s never a good idea to fund gambling with loans, especially ones with such a high interest rate! If you are considering or have taken a loan to fund gambling then gambling is getting out of control and you can call the gambling helpline on 1800 858 858 or visit gambling help online.

These days, the industry is highly regulated and most payday lenders have strict rules and procedures around lending. For a start, the purpose of your loan is to fund a gambling activity, then that should lead to an automatic decline. This was not always the case, as the corporate watchdog ASIC has investigated several payday lenders for lending do drug addicts or gamblers, which comes under the category of irresponsible lending. The law prohibits payday lenders from giving credit to customers who cannot afford it or where the repayments would cause substantial hardship. We definitely need more responsible lending where a decision to lend money is based on a sound financial situation of the potential borrower.

The payday lending marketing is dominated by Cash Converters and Money 3, but there are many other players in the market that all have various lending policies around gambling. All of them will require at least 3 months’ worth of banks statements and these will be inspected for excessive gambling activity as well as general expenditure habits. It’s not exactly regulated what “excessive” gambling is and generally comes down to the individual lenders lending guidelines. We spoke to many payday lenders and the criteria varied slightly from lender to lender, but all lenders had well defined policies. Some lenders will not lend to a customer where their gambling expenditure is more than 35% of their income. Furthermore, all gambling expenditure is included in the monthly budget, which will affect serviceability when considering whether the loan can be repaid or not. Other lenders mentioned that they use your financial situation to determine how much of a risk you are to lend to. If lenders see evidence on your bank statements of you making payments to gambling companies such as online betting websites, on a regular basis, you may be flagged as high risk and rejected.

The long and short of it is that funding gambling activity with payday lending will get you further and further into trouble. We urge you to seek help if you are falling into this trap.

Category: Betting

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