THE SCHEME IS A DRIVE TO COMBAT MONEYLENDERS, WHO CAN OFFER LOANS AT EXORBITANT INTEREST RATES
Killarney Credit Union has today announced the launch of a new loan scheme aimed specifically at people in receipt of social welfare payments. Branded the “It Makes Sense” loan, the scheme is aimed at those in receipt of social welfare, particularly those who may have used or considered using the services of a moneylender.
Applicants for this scheme do not already have to be members of the credit union. Once the person lives or works in the credit union’s common bond area, the credit union can process their membership application and then accept the person’s application for the “It makes sense” loan. As with any loan scheme, potential borrowers must be able to show a capacity to repay the loan. Mark Murphy, CEO of Killarney Credit Union stated:
“We have been operating this PMC loan for the past year and are delighted to be part of this ongoing initiative. Providing access to credit for those who need it most is at the very heart of the work we do. We are all very aware of the penal interest rates charged by moneylenders. This scheme can play a vital role in helping people to avoid getting trapped in a cycle of high interest debt”.
Loans issued under this scheme can be for any purpose. The maximum loan amount is €2,000 and the maximum loan period is two years. For applicants who receive their social welfare payments in cash (via a post office), the repayment for this loan must be made via the Household Budget Scheme, operated by An Post. Borrowers must be willing to sign up to and use the Household Budget Scheme to enable loan repayments. For those who receive social welfare electronically (into a bank or credit union account), repayments for The “It Makes Sense” loan must be made by standing order or direct debit, directly from the account which receives the social welfare payment.
The Central Bank estimates that about 360,000 (2013 Report on Licensed Moneylending Industry) people are using moneylending services in the Republic of Ireland. This does not take into account those using unlicensed operators. Interest charged on loans from moneylenders can be as high as 187%. The maximum interest rate which credit unions can charge is 12% (12.68% APR). Mark continued
"The 'It Makes Sense' loan is working to create a realistic offering to counter the ‘convenience and ease’ advantage that moneylenders have in this country. Credit unions have been very vocal throughout the recession years about the cost associated with using moneylenders. We believe that this loan scheme will offer people on social welfare a local, low cost alternative".
Additional information on the scheme is available at www.itmakessenseloan.ie.
Information Guide on the PMC Loan here.
To make an enquiry click here.