Newry Armagh Sinn Féin Sinn Féin -- Building an Ireland of Equals

No Such Thing as Easy Money - Rafferty

Published: 25 November, 2008

The availability of easy loans has been criticised by Local Sinn Féin Councillor Cathy Rafferty, who also advised people to be wary after being contacted by several local people who have fallen foul of this "easy loan promotion" She said, "In the current economic climate it can be very tempting to take up the offer of a loan, especially as we approach Christmas. However, I would urge people not to be hasty. I have been approached by a number of constituents who after taking out such a loan have found themselves paying back their loan at extremely high interest. Although the company offering these loans are not doing anything illegal it has to be said that the interest rates applicable to their loans are excessive. One example explains what I mean. One person borrowed £200 under a repayment scheme of 32 weeks at £10. That worked out at £320 an APR of 399%. That by any standards is a very high rate of interest. There are other examples but they all bear out the same cases of high interest rates."

The councillor went on to criticise such companies who she claimed seem either to target vulnerable people or appear be indifferent to the problems the repayment of such high interest loans can and does cause. "I have also been informed that the same company responsible for the example loan has encouraged its employees to increase their targets in the run up to Christmas with the incentive of increased bonuses. This can only mean increased pressure to sell these loans and in turn increased pressure on people to sign up. I would again urge people to read the small print when asked about such loans. £10 a week may not seem much at the time and can seem quite attractive when someone is trying to gather money to cover the expense of Christmas. But in the long run it will only add to their money worries. Don't be afraid to take time to read the small print, both literally and figuratively."

"There are many more companies, all offering the same if not similar deals. The interest rates for these loans ranged from 350% APR to a staggering 950%. There was even major differences being offered by the same company with little difference in the "benefits" being offered"

In another twist to this issue Councillor Rafferty also warned people to be wary of companies offering store cards for well known stores "These cards can be redeemed in the store but like the loans the rate on these cards is also very high. For a £100 card borrower will end up paying £150 back to the loan company. The amounts increase with higher value store cards."

"Even though this practice is not illegal that does not make it acceptable. The very nature of these loans is in my view aimed at those least able to repay them. They are not aimed at businesses. No businessman would take on a loan attached to such a high rate of interest. Therefore I would urge people to take a leaf out of the business community's book here and make sure that they are fully aware of all the implications of signing up for one of these loans."