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Moneylender defends charging 50pc interest rate

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Moneylender Amigo has defended charging four times more than credit unions for loans.

It has officially launched here with a loan that has an interest rate of 49.9pc.

British-based Amigo plans to offer its loans here online, with people with poor credit histories the target market. Its model means those getting a loan must have someone be a guarantor for them, typically family or friends. The guarantor is liable for the full value of the loan if they fail to make repayments.

Credit unions are restricted by law to charging no more than 12.7pc a year in annual percentage terms. However, there are moves to allow credit unions to double the maximum they can charge.

Amigo is authorised by the Central Bank to charge four times more than credit unions can charge at the moment.

The new moneylender is targeting people refused credit by traditional lenders.

Its offering is aimed at those with poor credit histories, and recently arrived immigrants.

“We believe there is a need to make access to credit possible for ordinary people who have limited credit history on file, often through no fault of their own, and cannot get a loan from their bank or credit union,” said Daniel Hawkins, managing director of Amigo Loans Ireland.

The new lender is offering amounts of between €500 and €5,000, for between one and five years.

The annual percentage rate is 49.9pc. Amigo insists this is the fifth-lowest annual percentage rate of all the moneylenders operating in this market.

Questioned about targeting customers with high-cost loans, Mr Hawkins said: “We think it is a fair price for the service we provide.”


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He insisted there was full transparency around the offering, and the experience in the UK was that less than 5pc of its loans were more than 30 days in arrears.

Amigo said it was different to other moneylenders, which can charge up to 200pc.

“It’s important that people understand that Amigo is not a doorstep lender. We are not a moneylender that will appear at your door to lend or collect money,” Mr Hawkins said.

The licensing of Amigo prompted Taoiseach Leo Varadkar to tell the Dáil the Government may need to consider a cap on moneylender rates.

Irish Independent


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