MABS in Ennis has warned that money-lending in the county is a signiﬁcant problem, a problem that is likely to multiply in the coming weeks.
Denis Corbet said that people seem to turn to moneylenders, the majority of them legal and licensed by the Financial Regulator, to cover the cost of returning to school, as they feel there is no alternative available to them.
“Back to school and the three Cs – Christmas, Communion and Conﬁrmation – put families under the most pressure. As access to credit is a problem for people, money-lending from legal and illegal moneylenders is going to increase,” he said.
The ﬁnance advisor warned against people turning to “doorstep credit” at all costs. This form of credit sees the loan agreement made at the person’s home and the repayments collected at the door.
“They are usually high interest rates with short repayments,” he said.
Legally registered moneylenders, many who advertise on television and in newspapers, carry out the majority of these transactions, and they are forcing many people into even more debt, he explained.
“There are legal moneylenders out there but there is no cap on the interest they can charge,” he said.
“Say, for example, you borrow € 100 from a lender and you pay back € 30 at a time over six months. You borrow € 100 from the credit union and pay back € 2.50 over a period of time. Now multiply that into thousands and you get the picture.”
The comparison may seem extreme to make the point but there is no limit on the interest charged so any number can be plucked from thin air.
Mr Corbet said the issue is part of a national social debate that needs to take place.
“Cash loans on the doorstep is just one part of the issue, catalogues and credit sales are also a problem,” he added. “If someone needs money, where do they go?” he asked.
He suggested that people ﬁrst turn to MABS for assistance.
He maintains that a lot of the issues can be dealt with through some ﬁnancial education.
In the coming weeks, MABS in Ennis will be producing a campaign to help inform people about the dangers of money-lending.