Following the announcement that Provident Financial, the largest moneylender in the Irish market, is to close its Irish and UK doorstep lending divisions, the Irish League of Credit Unions (ILCU) is taking the opportunity to remind people that credit unions provide affordable, ethical loans to those most in need and, as regulated financial bodies, are a viable alternative to expensive licenced moneylenders.
In 2020, credit unions issued over 138,000 loans under €2,000 to a total value of €137 million. 25% of credit union borrowers take out loans of less than €2,000.
Commenting on Provident’s withdrawal from the UK and Irish markets, ILCU President Helene McManus said, “Providing access to credit for those most in need was the reason credit unions were founded and it remains true today as it did in the 1950s. Credit unions remain open and are committed to providing loans of all sizes to members and potential members in local communities across the country, North and South.
I would strongly encourage anyone in need of a small loan to contact their local credit union, even if they aren’t currently a member or have a poor credit history, to discuss their financial requirements instead of going to a high cost licenced moneylender. Credit unions will assist borrowers to transition from their existing moneylender.”
All credit unions offer small loans and the maximum loan rate which a credit union can charge is 12% (12.68% APR). Over 100 credit unions in the Republic offer the ‘It Makes Sense Loan’, a scheme aimed at credit union members or potential members who are in receipt of a social welfare payment. Existing credit union members can contact their participating credit union to apply for the loan. Those who are currently not members will need to join their local credit union before applying for the loan.
For illustrative purposes, a loan of €500 from a credit union typically repaid over 6 months will accrue interest of €15 compared to €150 interest charged by licenced moneylenders for the same loan over the same period.