The Government is examining the possibility of setting up a fund to provide small loans to help people avoid illegal moneylenders.
According to a Department of Finance spokesperson, more people are driven into the hands of moneylenders due to their difficulty in getting loans from banks and credit unions.
“There is now a greater cohort of people who have no access to even smaller amounts of credit because of their injured credit rating,” according to Money and Budgeting Service (MABS) spokesperson Michael Culloty.
MABS is a free and confidential service for people who are in debt or in danger of getting into debt.
In Limerick, many people are going to moneylenders to borrow money for Christmas, often at exorbitant rates of interest, according to Limerick MABS Coordinator Yvonne Bogdanovic.
“Anyone with worries about personal debt, money or budgeting will always be made feel welcome and helped at MABS,” she said.
St Vincent de Paul (SVP) Social Justice spokesman Brendan Hennessy said that people are paying “hugely over the odds for these loans compared to credit union loans or bank loans”.
He cited the example of a person who was paying €530 interest on a €1,000 euro loan taken out over a one year period.
He said that there is a “glaring” need for financial education and money management in schools.
About 360,000 people take out loans from legalised moneylenders in Ireland, according to a recent report by the Central Bank.
The Central Bank’s Report on the Licensed Money-lending Industry shows a 20 percent increase in the number of people getting these loans since their last report in 2007.
The interest rates of these loans vary but can be as high as 187 percent Annual Percentage Rate (APR), according to MABS.
However, there have been no figures compiled to show the extent of illegal money-lending in Ireland.
Those involved in the business operate without a license, can charge very high rates of interest and, in many cases, can be dangerous to deal with.
The Limerick MABS office can be contacted on 0761072210 or firstname.lastname@example.org.