Recession sees 20pc hike in people using moneylenders
MONEYLENDERS have increased the number of customers they have in Ireland by 20pc since before the recession, new figures have revealed.
The regulator at the Central Bank has said that there are now 360,000 people relying on licensed moneylenders - up from 300,000 in 2007.
These moneylenders provide credit to consumers with an interest rate of more than 23pc.
At the end of October, the Central Bank oversaw 40 moneylenders, down from 47 in 2007.
However, the latest Report on the Licensed Moneylending Industry does not give a full picture of the situation as there are no figures for the numbers who access illegal moneylenders.
Moneylenders are often the last port of call for people who have been locked out of banks or credit unions due to a poor credit history or changed circumstances.
Annual interest rates of up to 200pc can be levied on borrowers and moneylenders also frequently impose a "collection charge" for their services.
The attraction of moneylenders is mainly due to the fact that loans structured over a shorter period of time will incur a lower rate of interest.
However, if the loan is extended past the repayment date, the interest can be extended to 52 weeks.
A representative for MABS said that people see loans as offering a "quick fix" but he warned: "If you can't afford to save then you can't afford to borrow."
The St Vincent de Paul have already warned of a "potential money lending crisis".
And it said it was alarmed at the prevalence of money lenders.
A sample of typical loans from moneylenders published by the SVP shows that a loan of €1,400 repaid over 52 weeks results in a repayment of €2,184, making the cost of the loan €784.
If the loan was €2,000 over the same period the repayment would be €3,120.
This is a massive €1,120 cost to the borrower.
"We need to take money-lending out of the shadows," said Brendan Hennessy of SVP.