McDonald's concern as the new lender enters the market

The Dáil heard a call for a limitation on licensed lenders and a crackdown on unauthorized lenders that target vulnerable families as Christmas approaches.

Sinn Féin President Mary Lou McDonald said unlicensed lenders charge "punitive" and "disgusting" interest rates, there is also a licensed lending industry whose practices are "just as disgusting" .

She made her comments amid reports that British lender Amigo Loans is about to enter the Irish market.

This company targets loans to people with low credit – who are backed by friends and family – at a rate of interest of almost 50%.

The lender, which has more than 200,000 UK clients, has been approved by the Central Bank for a money loan license to operate in Ireland.

Mary Lou McDonald said the Central Bank had authorized the company to offer loans at interest rates of up to 49.9% to those excluded from access to traditional financing.

"They call this credit" middle price ".I would call it robbery and they are not far from the only ones at this game," she said.

The TD Bank cited a recent report from the UCC's Center for Cooperative Studies – on behalf of the Social Finance Foundation – which revealed that lenders are empowered to charge interest rates of up to $ 30,000. to 187%, which, when collection fees are added, rises to 287% APR.

"The report also reveals that 21 of the 28 EU Member States apply ceilings to high-cost credit.This includes Ireland, but the only ceiling we apply relates to credit unions. We do not apply any ceiling to lenders, "she said. declared.

Amigo Loans offers loans of up to £ 10,000 (€ 11,334) in the UK, with a typical interest rate of 49.9%.

This means that a loan of £ 5,000, repaid over 36 months, will cost around £ 8,782 to repay.

However, a loan of € 5,000 from a local credit union, at a rate of 8%, will cost only € 5,640.55 to repay over the same period.

"Lenders are getting richer through struggling families," McDonald told Dáil today.

Taoiseach Leo Varadkar said that the central bank and not the government issued licenses for financial services, but he agreed with Ms. McDonald on the level of interest charged.

He also urged those considering borrowing to look for alternatives such as the "Make Sense Program" project run by the credit unions and the Department of Social Welfare, which offers short-term, low-cost loans.