The machine, operated by CashnGo Australia, is located inside the Berkeley outlet of a chain of tobacconists.

The same chain has these machines in at least four other stores in NSW – all of which would be banned under state legislation proposed by the Labor party.

Nationally, Labor has also introduced similar legislation into the federal parliament.

The machines, which resemble an ATM, require little more than the applicant’s identification and bank details to get a loan as high as $2000.

In a statement CashnGo claims the instant loan machines’ locations was part of a trial “to test the viability of the business model”

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But Mr Scully questioned the praticise of “small account credit contracts” which, he said have comparison rates between 112 per cent and 407 per cent.

A sample one-month loan on the CashnGo home page for $600 adds on $144 in fees – that’s almost a quarter of the total amount borrowed.

And it states it would allow someone earning as little as $620 a week to take on this loan.

That sample one-month $600 loan would see someone paying back a total of $744 at a rate of almost $200 a week.

If the person failed to pay back the loan, CashnGo is legally allowed to charge as much in fees as the original amount.

So the borrower could end up $1200 in debt for a $600 loan.

“These payday lending machines are debt traps for low and middle income families,” Mr Scully said.

“The financial providers rely on desperate people needing cash instantly while loading them up with debt that many can never escape.

“Interest rate charges are extraordinary.

“We can’t allow these debt traps to continue to exist, making life hell for financially desperate people and families who will be stuck with sky high interest charges.”

A CashnGo statement said the company would “only approve customers for a loan they can repay”.

“Our aim is to protect consumers from unfair lending practices by providing an alternative to the predatory nature of the traditional lending market and its ability to add to the financial difficulties of people on low income, whilst providing access to funds they so desperately need,” the statement from CashnGo read.

“For we believe that families still deserve the right to obtain credit.”

A spokeswoman said the company’s fees and charges were government by the National Consumer Credit Protection Act.