The number of families turning to moneylenders for instant cash loans is soaring, with the biggest firm Provident now lending to 100,000 customers.
With more than 40 licensed moneylenders operating across the country, and countless illegal agents, the numbers forced to borrow at exorbitant rates could be closer to 200,000.
Provident Personal Credit, which makes unsecured loans of up to €500, is the largest moneylender in Ireland and Britain. An Irish Examiner investigation in 2009 revealed Provident had 75,000 customers here. This rose to 88,000 in 2010 and the firm now lends to 100,000 people.
For every €100 borrowed for one year, Provident charges €56. For six-month loans, the APR rises to 187.2%, where the cost is €30 per €100 borrowed.
Statistics from the Money Advice and Budgeting Service show that over a nine-month period last year, 830 new clients were in debt to moneylenders. The same figure for the whole of 2010 was 1,418.
The Society of St Vincent de Paul has raised concerns about how they operate, targeting people at certain times of year and sending agents door to door offering cash.
Provident said it does not call door to door offering money but that it sends direct mail letters to customers and prospective customers.
It said the amount agreed to be repaid when the loan is taken out does not rise.
“The repayment period is weekly and most customers have an agent of the company call to collect their repayments at their home,” a spokesperson said.
A report by the Financial Regulator in 2008 found that although moneylenders are legally required to display their APR, it is not a useful measure, particularly for loans with terms of less than one year.
Moneylenders are also required to give the cost of credit per €100 borrowed.
For example, in its licence agreement, SouthsideFinance Ltd offers €1,000 for 26 weeks at an APR of 128%. The cost of the loan per €100 borrowed is €30, bringing the total cost of the loan to €300. R&P Credit offers €300 for 21 weeks at an APR of 195%, including collection fee, stating the cost of the loan is €75.
Currently, there are 47 moneylenders licensed by the Central Bank.
Each firm is subject to certain restrictions in relation to the APRs, costs of credit and terms and conditions attached to their loans. The updated register of lenders shows that four are now only licensed to collect outstanding loans. One of these lenders, Murray Nolan Ltd, is in receivership.
Illegal moneylenders pose the biggest problem for consumers and according to the Central Bank, one third of licensed moneylenders are aware of people acting as illegal lenders.
Brendan Dempsey, southern regional president of the St Vincent de Paul, said illegal moneylenders who acted aggressively had “mushroomed” in the past few years. He said gardaí did not seem to have the resources to deal with them.
“We made gardaí aware of the problem many years ago and they said they would deal with it. It is worse now and the laws don’t seem to be there to deal with the issue effectively,” he said.
Mr Dempsey said the Criminal Assets Bureau should take action.
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