Tuesday 24 October 2017

Moneylenders now charging customers up to 287pc interest

John Mulligan

John Mulligan

MONEYLENDERS are typically charging interest rates of 125pc for a nine-month loan, lumbering consumers with over €58 in interest for every €100 borrowed.

But some are charging more – with interest rates as high as 188pc being levied on hard-pressed families.

New research from the Central Bank shows that when collection charges are added in, the rates can soar up to 287pc. That means somebody who borrowed €100 over nine months would end up paying back €151.82 in interest and charges alone.

Most loans taken from licensed moneylenders are for between €200 and €500, with the term applying to any lender that charges more than 23pc APR.

The bulk of consumers who take out the loans have been refused credit from other financial institutions, and most don't even consider taking a loan from somewhere else before opting for a moneylender.

Almost a third use the loans to buy clothes, electrical items and homewares, while 23pc use them to fund family events, such as First Communions. But 14pc also use them to pay for sports membership of venues such as golf clubs or gyms.

There are currently 360,000 moneylender customers, up from 300,000 in 2007. They have outstanding loans totalling €200m, compared with €124m six years ago.

The Central Bank's register of moneylenders includes 43 licence-holders, including firms such as Shop Direct Ireland, which trades as Littlewoods Ireland.

Shop Direct is one of Ireland's cheapest moneylenders, with its maximum 43.70pc APR interest rate only applying to loans that are taken out over a 172-week, or just over three-year term.

One of the most expensive moneylenders on the Central Bank register is Dublin-based Southside Finance. It charges a maximum interest rate of 188.45pc on loans with just a 20-week term. Including a collection charge of 7 cent for every €1, the APR rate rises to 287.72pc.


The single biggest moneylender in Ireland is Wexford-based Provident Personal Credit, according to Labour senator Lorraine Higgins, with over 100,000 customers.

The company is owned by UK-based Provident Financial.

A quarter of customers had experienced difficulties in making repayments in the last 18 months, with 63pc of those reporting that a drop in household income was the reason for payment problems.

Ms Higgins yesterday called for steps to be taken to alert people to the profits being made.

But the research found that 84pc of customers say they know how much their loan will cost and 69pc understand the amount of interest being charged. Most are also satisfied with their moneylender.

Irish Independent

Editor's Choice

Also in Irish News