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Credit Union research shows high usage of moneylenders among NI public

Research from the Irish League of Credit Unions shows that over 270,000 people in Northern Ireland have used moneylenders or payday loans while a further 193,000 people would consider using these services.

The research asked people  if they had borrowed from moneylenders or payday loan companies and why they had used these companies as opposed to other sources of credit.  Those interviewed in the survey stated that they would consider these methods of financing in an emergency, if they needed cash quickly or if they were unable to access more mainstream credit.  61% of people who had accessed this type of credit did so via online moneylenders with 23% using doorstep lenders and 13% using the services of a money shop.

Interest rates, amounts borrowed and reasons for borrowing

Worringly, 84% of those people surveyed who had used a moneylender did not know what rate of interest had been charged on the loan. Amongst those who knew what rate they were paying, an average 885% APR was reported.  

The majority of people who had used a moneylender borrowed between £100 and £750, although 11% had borrowed larger amounts of between £1,500 and £3,000.  Those respondents who had previously used a moneylender were more cautious about borrowing large amounts and had a better awareness of the charges and interest rates that are commonly applied to these types of loans.  However, 30% of those who have experience with moneylenders said they are likely to top up an existing payday or moneylender loan.

Harassment and intimidation

27% of those who have borrowed from a moneylender report some level of intimidation, ranging from persistent calls and emails to premature demands for repayment.  11% reported a threat of physical injury or goods seizure. 

On the publication of this research Brian McCrory, President of the Irish League of Credit Unions reminded the people of Northern Ireland that credit unions offer fair, competitive loan rates, that are capped by law and which are significantly cheaper than pay day loans or loans from moneylenders. According to Mr McCrory, a payday loan of £400 over 31 days could cost a consumer £129 in interest and charges from a moneylender, wherease the same loan would cost just £4 from a credit union.

Read more on the Irish League of Credit Unions website.

Tagged In

Money Matters, Affordability

This article was written on 16 December 2015. It should not be relied on as a statement of the current law or policy position. For help with housing issues please contact our helpline on 028 9024 5640 or use our online chat service at www.housingadviceNI.org.