High-cost credit loans
What are high-cost credit loans (moneylender loans)?
High‑cost credit loans, sometimes called moneylender loans, are short‑term loans with very high interest rates and strict rules on how they are sold and collected. These loans are now regulated under amended legislation, and providers are called high-cost credit providers.
This page explains how these loans work, what licensed providers must tell you, the true cost of borrowing and your rights if you miss payments, as well as how to check a lender is regulated and where to get help if you are struggling.
If you miss payments, the lender cannot charge extra fees or penalties, and the total amount owed should not increase. If you are struggling to repay, the Money Advice and Budgeting Service (MABS) offers free, confidential help in every county. Only licensed providers can legally offer these loans – always check the Central Bank’s register and avoid unlicensed lenders.
High-cost credit loan providers
There are different types of high-cost credit providers. Some, such as door-to-door lenders, offer smaller loans between €100 and €1,500, repaid in cash over weeks or months. Others may offer larger loans of €1,000 or more. Some shops and catalogue companies may also be authorised as high-cost credit providers if they charge over 23% APR.
What information must high-cost credit providers give you?
Under the Central Bank’s Requirements and Guidance for High-Cost Credit Providers, lenders must give you clear details about fees, costs, and interest before you take out a loan. If the loan has an APR of 23% or higher, they must explain that it is a high-cost loan.
How do you pay back these loans?
Door-to-door providers usually collect repayments in cash each week. Under amended legislation, they cannot charge a collection fee, and you can choose to make repayments online. Some providers allow you to repay larger loans by direct debit from your bank account.
If you have agreed in writing beforehand, the agent can collect repayment from Monday to Saturday between 8am and 10am. No collections can be made on a Sunday or a public holiday.
How expensive are high-cost credit loans?
Borrowing from a high-cost credit provider is usually more expensive than borrowing from a bank or credit union. The APR is at least 23%, and often much higher.
There is a simple interest rate cap of 48% per year, but the APR charge may be significantly higher. It’s important to look at the cost per €100 and the total cost of credit. The total cost of credit tells you the extra amount you have to pay on top of what you borrowed.
| Loan amount | Maximum loan term | APR | Maximum simple interest allowable | Weekly repayment | Total amount to repay | Total cost of credit | Cost of loan per €100 borrowed | % of the amount borrowed |
|---|---|---|---|---|---|---|---|---|
| €1,000 | 25 weeks | 1% per week | 152.3% | €50 | €1,250 | €250 | €25 | 25% |
How do you keep track of repayments?
Depending on your loan type, you will get a repayment book or loan statement to track payments. Keep this safe, as it is your main record. You can also choose an online repayment book if you prefer.
Your repayment book or statement will show:
- The total loan amount and APR
- The amount and number of payments due
- Each payment made, with date and amount
Each time you pay, the amount and date must be written on your repayment book or recorded on your next statement, so you have a record of how much you have paid and how much is left to pay.
What if you cannot afford to pay back your loan?
Start with the debt action plan to help tackle your debts. If you miss payments, contact your provider as soon as possible. If you fall behind, a provider cannot charge you fees or penalties or give you another loan to pay off the first one.
If you cannot sort out the matter directly with your lender, you can get help by contacting the Money Advice and Budgeting Service (MABS). They offer free, confidential and independent advice to people in debt and have at least one office in every county.
How do you check your provider is regulated?
The Central Bank sets standards for high-cost credit providers. Make sure your provider is licensed – it is illegal to operate without a licence. Check the Central Bank’s register. Report any illegal providers to the Gardaí . If an illegal high-cost credit provider approaches you and offers you a loan, do not be tempted to deal with them.
