Amigo unveils 50% rate for its ‘guarantor’ loans

New lending entrant Amigo said it has struck a fair price in charging 49.9% for its loans to people who cannot borrow from banks and credit unions because of their poor credit record.

The lender, which started operations in the Republic this week, said it will work over the next few years to build its knowledge of its new “guarantor” market in the Republic.

It has operated in the UK for a number of years and listed its shares on the main stock market in London last year, where it is valued at around £1.12bn (€1.27bn).

It captured the bulk of the UK market for so-called ‘guarantor’ loans, which provides borrowers who are refused credit by banks or credit unions because of their credit history access to loans — if they can provide guarantees from family or friends that the loans will be repaid.

Its expansion into the Republic was not driven by Brexit considerations.

The lender — which stresses it is not a door-step lender — is effectively competing with money lenders that charge over 50% and up to 180% interest for their loans.

The regulatory cap on credit unions may be lifted which would allow them to take on riskier loans, but charge much more, up to a maximum of 24% a year for loans.

Amigo offers guarantor loans of between €500 and €5,000 for 12 to 36 months.

“Amigo seeks to provide a better alternative for those customers in Ireland who are unable to obtain finance from the bank or credit union, due to a lack of credit history or an unforeseen life event... but shouldn’t have to resort to accessing finance from a moneylender that charges over 100% APR,” it says.

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