Millions of vulnerable Australians are falling victim to payday lenders, with more than 135,000 short-term, high-interest loans being written a month.
New data compiled by the Stop The Debt Trap alliance, comprised of 20 consumer advocacy groups, shows in the last three-and-a-half years 4.7 million payday loans have been written, totalling about $3.1 billion.
The number of loans written per month has skyrocketed from about 100,000 in 2016 to 135,000 between January and July this year.
Victoria recorded 275,624 new payday loans between January and July this year, the most of any state or territory, followed by NSW with 254,242 new loans.
The fastest growth has been in Tasmania and Western Australia, with rises of 15.5 per cent and 13.5 per cent respectively.
The number of women using payday loans has also risen from 177,000 in 2016 to 287,000 in 2019.
"Forty-one per cent of these women are single mothers," Gerard Brody from the Consumer Action Law Centre said on Tuesday.
"Women who are doing it tough are being inflicted harm by payday lenders."
Payday loans, or small amount credit contracts, are short-term, high-interest loans for amounts up to $2000.
Lenders can charge annual interest rates between 112 and 407 per cent and are known to target people in financial stress, often trapping them in a cycle of debt.
It is estimated about 15 per cent of borrowers will fall into a debt spiral, which can have serious consequences including as bankruptcy.
Stop The Debt Trap wants the federal government to urgently introduce tougher regulations for payday lenders.
"While Prime Minister Scott Morrison and Treasurer Josh Frydenberg are acting all tough when it comes to big banks and financial institutions following the financial services royal commission, why are they letting payday lenders escape legislative reform?" Mr Brody said.
A Labor effort to limit payday lenders stalled when the party was unable to win the federal election.
Australian Associated Press