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Pawn shops can provide a quick source of needed funds, but perhaps it’s time for a reality check.

The interest rates pawn shops can charge vary widely though an average from the major providers sits around 30% per month or up to a staggering 400% per annum!

In a recent NZHerald article researchers at Otago University’s Wellington Medical School found that “unscrupulous” money lenders were targeting Maori, Pacific and low income New Zealanders to charge the extortionate rates.

“Loan sharks target and thrive in low income communities because consumers are borrowing for everyday needs,” says lead researcher Associate Professor Louise Signal.

“The consequences of borrowing from these unscrupulous loan sharks can be extremely costly and generate, or prolong, financial hardship for these people.”

This holiday season can be a financial stretch for most families. Be aware to the real cost of a payday or pawn shop loan and its on-going consequences.