Struggling families warned over loan sharks

Local volunteers with the St Vincent de Paul Society (SVP) are warning that high interest moneylenders are ‘as active as ever’ in communities across Galway.

The society is urging anyone who is struggling – particularly with fuel and food this Christmas – to avoid getting into debt and reach out to the organisation if they need help.

“Using moneylenders is a practice SVP advises people to avoid if they can,” said a spokesman for the charity in Galway.

“Our members in Galway say that moneylenders are as active as ever. However, there are fewer families being helped by SVP who are using moneylenders.”

The charity recommends that families check out the Personal Micro-Credit (PMC) scheme which was specifically designed as an alternative to moneylenders and is offered to social welfare recipients and low-income households.

Also known as ‘It Makes Sense’ loans, they allow people to repay through the Household Budget Scheme administered by An Post or by a direct debit, building up their credit rating and giving access to more affordable credit.

If somebody takes out a €500 “It Makes Sense” loan, repaid over six months with an APR of 12.68% they will be charged interest of €15.84.

The same loan from a licensed moneylender at a rate of 187.2% APR – a very common rate for so-called ‘doorstep loans’ – will command €150 in interest.

“Many of the families we visit will struggle to make ends meet this Christmas and some will consider borrowing money to meet the extra expenses they face at this time of year,” SVP national president Kieran Stafford said.

“Being able to access affordable credit, rather than loans with extremely high interest rates is essential if families are to avoid becoming over-indebted.”

The Irish League of Credit Unions (ILCU) also urged people to shun high interest moneylenders at all costs.

“Should they need to borrow, they should speak to their credit unions in the first instance where Christmas loans are straightforward, interest rates are capped by law and credit unions will work with their members to structure repayments in a way that suits their individual circumstances,” spokeswoman Lonán Paul of the Irish League of Credit Unions told the Galway City Tribune.

She stressed that 15 credit unions across Galway (including four in the city) are involved in the PMC scheme, which currently has 6,000 live loans.

“The long-term aim of the PMC is to graduate borrowers on the PMC to standard lending and ultimately to financial health and independence. Applicants for the loan do not already have to be members of the credit union once they live or work in the area.

“Loans issued under the scheme can be for any purpose. Credit unions exist solely to meet their members’ needs – they are not for profit institutions – and always stand ready and willing to offer affordable credit – with loans at reasonable rates, capped by law, unlike moneylenders.”

This week Retail Ireland predicted that Irish households will spend an average of €2,690 this Christmas, which is a 3% increase on the average spend last year and €866 more than any other month of the year.