The emergence of instant cash loan machines across parts of New South Wales has sparked fears about low-income families being potentially caught in a debt trap.

The machines, which look like ATMs, only require identification and bank details before users are approved for cash loans almost immediately.

Financial counsellors have expressed concern about the devices, which they say appear to be popping up in low socio-economic areas.

The instant loan machines, which appear to only exist in NSW, have emerged in parts of Wollongong, south-western Sydney, the Central Coast and Hunter regions.

The company that runs the devices states on its website that its machines "have been strategically positioned in local shopping areas to make things easy".

Loan amounts vary from $50 to $1,000, with limits increasing when users access the machine numerous times.

People have one to three months to pay the loan back.

Shop attendants at one tobacco store where a machine was located told the ABC the machines had proven popular, but noted a large proportion of users were from a low-income background.

Concern machines are targeting vulnerable people

NSW Financial Counsellors Association chairman Graham Smith said he was worried disadvantaged communities across NSW were being targeted.

He said the association had been notified about three of the machines alone at Cessnock in the Hunter region.

"There are two smoke shops, and in one shop there is one [machine], and in another shop there is two. Usually there is a queue out the door around Christmas time," Mr Smith said.

"Unfortunately I think these machines are targeting the most vulnerable in our community, people on benefits who are looking at a way of getting some quick cash that I don't think they can afford in the long run."

Mr Smith said people needed to exercise caution when it came to any quick loan schemes.

"It's an area of our society where people are struggling, and with electricity bills increasing, people have got less and less money, and going to one of these organisations and getting a loan can often be a deep financial trap," he said.

The company that owns the machines, Cash N Go Australia, said in a statement the current locations of the kiosks were part of a trial looking at the viability of the business model.

"As the costs of living increase, the market for short to medium term loans has expanded to include those on lower incomes," the statement read.

"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."

Need for greater protections, Labor says

Labor MPs in Wollongong and Newcastle have shared concerns about the instant loan machines appearing in their local communities, and want to see stronger protections for vulnerable people.

The machines are legal and are regulated by the Australian Securities and Investments Commission in the same way as other payday lenders.

Following a 2015 Commonwealth review of small amount credit contract laws, draft reforms were released in October that proposed imposing caps on payments that could be made.

Instant cash loan machines are nationally regulated in the same way as other payday lenders. ( ABC Illawarra: Gavin Coote )

But Opposition spokesman for regional services, Whitlam MP Stephen Jones, said a number of dissenting Coalition MPs had "scuttled any plan to have a Government-led initiative".

He warned if action was not taken, more instant loan machines would likely pop up in disadvantaged areas.

"We've seen with the spread of payday lending that these shops spring up all over the place where there's economic hardship," Mr Jones said.

"I think we need to have a good hard look at what is being done here to ensure that we don't make a bad situation worse."

A spokesman for the Assistant Minister to the Treasurer, Michael Sukkar, said the Government was considering submissions received on the draft laws, and it would push forward with legislation this year.

Any changes would take effect 12 months after the passage of new laws.