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Monday 20 November 2017

With Christmas around the corner, scourge of moneylenders highlighted again

Four out of 10 adults have borrowed to pay a household bill in the last year, with the most desperate 10pc using a moneylender. Photo: Thinkstock
Four out of 10 adults have borrowed to pay a household bill in the last year, with the most desperate 10pc using a moneylender. Photo: Thinkstock
Ailish O'Hora

Ailish O'Hora

WITH Christmas around the corner, many cash-strapped families may be tempted go down the route of the moneylender.

A new Central Bank report just published showed the bulk of consumers who take out these loans have been refused credit from other financial institutions while 25pc of those with moneylender loans in trouble paying them back.

It is a growing business for the lenders – accessibility is seen as one of the main reasons for their popularity sparked, in part, by the growth in mail order businesses here.

It should be a concern that almost a third use the loans to buy clothes, electrical items and homewares while 23pc use them to fund family events like First Communions.

But warning bells should also be sounding after it emerged that 14pc of those who take out these loans are using them to pay for sports membership at venues like golf clubs or gyms.

And with these lenders charging interest rates of up to 290pc, it’s no wonder the Central Bank is advising those in difficultly to turn to the likes the Money Advice & Budgeting Centre and St Vincent de Paul.

But both of these organisations are already snowed-under helping those who are struggling in the current economic climate.

This issue is underpinned by the failure of the banking system with traditional lending services pretty much put on ice and credit unions in more risk averse mode when it comes to dealing with loan requests.

One area that could be investigated as an alternative is micro credit which is the lending of small amounts of money at low interest rates – it has proven successful in other countries and there is no reason why it couldn’t be applied here.

According to the report, there are currently 360,000 moneylender customers, up from 300,000 in 2007.

They have outstanding loans totalling €200m, up from €124m six years ago.

In addition, the Central Bank report only focused on regulated money lenders.

With our multi-billion black economy growing by the day, the report doesn’t even scratch the surface of the problem when you consider this aspect of what is obviously a hugely lucrative business for those on the lending side.

Irish Independent

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