Surge in families turning to money lenders
The country’s largest licensed home collection money lender has acquired an additional 13,000 customers in just over a year, new figures have revealed.
Last summer, an Irish Examiner investigation on money lending found at least 150,000 people are borrowing from licensed money lenders.
Then Provident, which employs about 500 agents who operate a door-to-door collection policy, had 75,000 customers here. Now, it has 88,000, an increase of 13,000 in just over one year. It charges an APR of 187%.
The figures from Provident suggest the numbers forced to turn to money lenders could now be up to 200,000.
There are 50 licensed money lenders like Provident operating in the country with rates which range from 35% to 188.45%, the highest rate being charged by Southside Finance Ltd with an address in Stillorgan, Co Dublin.
Brendan Dempsey, southern regional president of the St Vincent de Paul (SVP), said the figures were not surprising and it was very difficult to break old habits.
Last year, Mr Dempsey started a pioneering initiative to help wean people away from money lenders, but he said it was going surprisingly slowly.
Under the scheme, the SVP acts as guarantor to help people secure loans from their credit unions in Cork.
“We want to let people know the scheme is still available. It is surprising people are still going to money lenders if they know this is available,” he said
Mr Dempsey said even someone who had never been a member of the credit union could access money with the SVP’s help.
Labour TD Seán Sherlock said it was shocking the Financial Regulator could sanction and defend such huge interest rates.
He said he had recently seen cases of borrowings from a money lender licensed by the regulator, that illustrate the case.
“The customer borrowed €1,000 and repays 51 repayments of €30 per week, amounting to interest of €530 or APR of over 150%,” he said.
SVP vice-president John Monaghan said, although it was unpalatable that licensed money lenders could charge so much, they at least were transparent and did keep many out of the clutches of illegal lenders.
Mr Monaghan said there was always a surge in activity for borrowing around back to school and Christmas time. He said people were borrowing money for basic things such as food and utility bills.
A spokesperson for Provident said it makes small, unsecured loans, normally of between €50 and €500.
“The amount agreed to be repaid when the loan is taken out does not rise, even if a customer is experiencing difficulty in repaying and agrees with the company to make reduced repayments for a while or stop repaying altogether for a period. The repayment period is weekly and most customers have an agent of the company call to collect their repayments at their home each week.”
Laws around money lending state they are required to disclose all the fees, costs and interest in a clear manner, and prominently indicate the high-cost nature of the loan on all loan documentation where the APR is 23% or higher.
