Tuesday 17 September 2019

UK moneylender to charge 49.9pc interest here

Mary Lou McDonald. Picture: Collins
Mary Lou McDonald. Picture: Collins
Charlie Weston

Charlie Weston

The Central Bank has licensed a new moneylender, prompting renewed calls for a cap on what they can charge.

British lender Amigo has now been approved to charge 49.9pc for loans here and expects to start operations from March next year.

It brings to 39 the number of licensed moneylenders now operating in this market.

And it comes just weeks after a report written by UCC academics called for the interest rates which moneylenders can charge to be capped. Most European countries impose interest rate restrictions.

The licensing of Amigo prompted Taoiseach Leo Varadkar to comment in the Dáil that the Government may need to consider a cap on moneylender rates.

He was responding to Sinn Féin leader Mary Lou McDonald, who raised what she said were "outrageous" rates that firms approved by Central Bank can charge.

"This Amigo is no friend to anyone borrowing money from them," she said.

The Taoiseach recommended people excluded from mainstream lending use credit unions, and said the Amigo lending rates were very high.

Amigo plans to offer its loans here online, with people with poor credit histories the target market. A typical loan in the UK is for £4,000 (€4,530) over four years. Approval is granted within 24 hours.

Its model means those getting a loan must have someone go guarantor for them, typically family or friends.

The loan is given to the guarantor.

It said this was to "cement the relationship" between the borrower and the guarantor and to ensure the person guaranteeing it is comfortable with the arrangements.

It charges a fixed rate of 49.9pc for loans, which means it is classed as a moneylender in this country. This means a loan for €5,000, over three years, will cost €8,780 to repay.

Getting the same-sized loan over the same period from a credit union will cost just €5,600, based on an interest rate of 8pc.

Irish Independent

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