A new report claims that over a hundred thousand Irish borrowers are now in the clutches of moneylenders as the economic crisis deepens.
The Sunday Independent newspaper has reported that desperate customers have been left with no choice but to pay the huge interest rated charged by the lenders – sometimes as high as 157.3 per cent.
Many of those identified by the paper as customers of Ireland’s 47 licensed moneylenders have been turned down for credit by the banks.
Fianna Fail Finance spokesperson Michael McGrath told the paper that he believes an increasing number of people are going to be forced to use moneylenders in the aftermath of the recent Budget.
McGrath said: “Given that the focus of the Budget hit those on low incomes and welfare-dependent families, I think it is only inevitable that more and more people are going to take on an increasing amount of debt and come within the grasp of moneylenders.
“Especially now, over Christmas, people will be going to these moneylenders as they seek to get some form of short-term lending in order to make ends meet.”
The report states that many legal moneylenders charge a maximum interest rate of 157.3 per cent APR and make huge profits. One of the market leaders in the money-lending area declared a profit of over $200 million last year.
The independent Money Advice and Budgeting Service believes more and more people will turn to lending agencies as it has become the only available access to credit they have.
A spokeswoman for MABS said: “The legal moneylenders tend to be a feature of lots of people’s debt. They tend to be very civil to clients and seem to be just a fact of life to some people on low incomes who will borrow from them for things like Communions and Christmas and this has always been the case.
“They tend to be increasingly necessary for people who cannot borrow elsewhere. They are a place where people on low means go to borrow.
“The people who use these agencies have become acclimatised by continuously borrowing at these high rates, and ultimately end up seeking help from us.”
Moneylenders are licensed by Ireland’s Financial Regulator and legally are able to charge 187 per cent APR on loans.