A concerted effort by legal moneylenders to sign up customers in the run-up to Christmas has prompted calls for those in desperate financial straits to head instead to their local credit union.
Licenced operators are targeting homes in the city and county offering interest rates of at least 60% – or 187% APR – for so-called ‘doorstep loans’.
A €460 loan payable over 26 weeks will spiral to €598 with the financial agency. If €500 was borrowed through the credit union, it would attract interest of €26.08 over twelve months, less than a tenth of the interest payable on the moneylender’s terms.
St Vincent De Paul (SVP) has been alerted to the campaign by local volunteers who worry that vulnerable people will sign up for loans without fully appreciating how exorbitant the rates are. Some 360,000 people regularly use these lenders, which operate within the financial regulations.
“We understand what drives people to go to moneylenders, they might have no other financial institution to turn to and there is a convenience in getting these loans and paying them back at the door,” said spokesman Jim Walsh.
“But we always advise to avoid going that route if possible because of high interest rates and the difficulty in getting away from the moneylending route. People should first seek advice first from SVP, MABS (Money Advice and Budgeting Service) and their local credit union.
“These people will be calling to your door every week for 26 weeks. Now, they would say that’s not intimidating but it’s certainly not a pleasant thing to have somebody calling looking for money, week in, week out for six months.”
See full story in this week’s Connacht Tribune.
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