Moneylenders now charging up to 188pc interest on loans
And another 40pc of people receiving welfare payments have used moneylenders in the recent past, new research has revealed.
There are 46 licensed moneylenders in the State and they can legitimately charge interest as high as 188.5pc on short-term loans - 10 times higher than interest charged on credit cards.
Now Social Affairs Minister Seamus Brennan is to seek assistance from his Cabinet colleagues in a bid to stamp out the problem posed by vulnerable people borrowing from moneylenders at exorbitant rates.
The shocking revelation that four out of 10 people on social welfare are using moneylenders comes from research carried out by the Centre for Co-operative Studies at University College Cork.
The researchers also found that a third of lone parents were borrowing money from moneylenders.
Expensive
Figures obtained by the Irish Independent show that the most expensive lenders in the country are two Dublin-based moneylender operations.
Ancar Estates and Southside Finance, both based in Dublin, are licensed to charge a huge 188.5pc interest for loans over 20 weeks.
But the Irish League of Credit Unions warned yesterday that illegal (unlicensed) moneylenders were charging even higher interest rates.
Head of the league, Liam O'Dwyer, commented: "Moneylenders, both legal and illegal, charging very high rates of interest are preying on the vulnerable, the less well-off and the less financially literate."
Mr Brennan said his department was considering imposing a cap on the interest rates moneylenders can charge, but he was aware this risks pushing the problem underground.
Chief executive of the Consumers' Association Dermott Jewell called for the State to step in to provide assistance for people who find themselves in the clutches of moneylenders.
The largest moneylending operation in Ireland is British company Provident Personal Credit, which is licensed to provide loans over 26 weeks at annualised interest of 187.3pc.
A spokeswoman for Provident defended the charges, claiming that there were huge upfront costs involved in providing what she called "home credit". Provident made profits of stg£106m (?158m) in Britain and Ireland last year.
Reacting to evidence uncovered by the Money Advice and Budgeting Service (MABS) that annual rates of 39pc were being charged by finance lending and utility companies, Mr Brenna said the figures were "quite alarming".
- Charlie Weston and Senan Molony
