Loans from moneylenders have been in the news recently for all of the wrong reasons – a Donegal couple successfully brought Provident Personal Credit to court for being illegally offered new loans while still paying off existing ones.
So what exactly are moneylender loans, and should you take advantage? Simply put, such loans are short-term loans that generally come with an exorbitantly high interest rate attached. For example, new customers with Provident Finance can take out up to €500 and repay it over a period of 26 or 52 weeks (€25 per week). With the former, you’ll end up paying €150 in interest with 187.2% APR; if you choose to repay over the course of a year, you’ll pay €280 in interest (157.3% APR).
To put that in context, a €500 personal loan from Rathfarnham Credit Union paid back over six months would mean weekly repayments of €19.68 and total interest payable of €11.73.
If you need a loan but haven’t been approved by your lender, don’t despair and don’t immediately turn to one of these moneylenders. The Personal Microcredit Scheme is hoped to be up and running by the time the back to school rush begins, offering hassle-free loans of up to €1,000 from the Government, in a bid to turn people away from moneylenders. Helmed by the Department of Social Protection, such loans will involve minimal credit checks and could be approved in as little as one hour.