David McCarthy talks finance on Galway Talks

QUESTION:  I heard your piece last week on Moneylenders.  I am in a terrible position at the

moment as I owe money to an illegal moneylender and I cannot sleep at night.  Is there anybody that can help me?  ANSWER:  This is a terrible situation that you find yourself in and a lot of people feel trapped when they deal with moneylenders particularly illegal ones.  It is important that you get assistance and advice and I would recommend that you talk to MABS, St. Vincent de Paul and the Credit Union to see what help they can provide you with.

QUESTION:  Have you any tips in relation to travel insurance?  ANSWER:  I would recommend that you take out an annual travel insurance policy, which should cost in the region of €70 or €80 per annum.  These policies can be arrange online and are far better value than taking out cover every time you travel.

QUESTION:  I have a number of short term loans and the repayments are crippling me.  Is there any lender out there that would give me 1 loan and amalgamate all my debts?  ANSWER:  Unfortunately there is no easy answer to your problem.  It is impossible at the moment to get any lender who will amalgamate all your loans.  I would therefore recommend that you go back and renegotiate with each lender a repayment level that suits you.  This would involve lengthening the terms of the loans and getting the banks consent to do this.  I would also suggest that you only offer the bank what you feel you can afford and not be forced into a repayment schedule by the bank, that puts undue pressure on you.  

QUESTION:  I retired from the Public Sector some months ago and have kept the lump sum that I received on deposit.  What advice would you give me regarding investing these monies?  ANSWER:  If you have no need for the monies over the next few years, I would suggest that you look at a capital guaranteed bond.  There are a variety of these bonds available presently and some of them provide a deposit element whereby a portion of your monies are returned to you after 1 year with a guaranteed return. 

ISSUE:  MONEYLENDERS

Last week we spoke about moneylenders and I recommended that there were 3 steps necessary to try to address this problem, and help those who are experiencing the hardship of having to deal with both legal and illegal operators.   The 3 steps I recommended were the following:

  •  Concerted action by the Central Bank on the rate of interest that can be charged by legal moneylenders.
  •  The only way to cut off the business to moneylenders is for people to be able to access credit through alternative sources such as the Credit Union.  The government needs to look at putting in place a program for smaller loans, that borrowers can access at reasonable interest rates. 
  •  A clampdown on illegal operators by the Gardai.

On one of the points above I was interested to see that the Irish League of Credit Unions have called on the government to bring in a statutory interest rate cap for licensed moneylenders.  There is no formal cap on these rates presently, but in practice there is a ceiling of 190% APR, applied by these operators through their licence with the Central Bank.  Other EU member states have a tight price control on the cost of credit provided by moneylenders, and therefore the government needs to take a similar concerted action here.