A UK MONEYLENDER which charges borrowers an annual rate of 49.9% has officially launched in Ireland.

Amigo Loans specialises in loans for people with bad credit ratings. It offers customers loans of between €500 and €5,000 for a period of one year to three years. 

It works using a model whereby someone with a better credit rating, usually a friend or family member, acts as a guarantor for the borrower in case they can’t pay the money back.

A customer who borrows €5,000 from Amigo over three years will pay back a total of €8,782.

“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,” Daniel Hawkins, Managing Director of Amigo Loans Ireland, said. 

The company was authorised by the Central Bank last November. News of it receiving its money-lending licence sparked a strong rebuke from Sinn Féin leader Mary Lou McDonald in the Dáil.

“The Central Bank has sanctioned it [Amigo] to offer loans with interest rates of up to 49.9% to people who have been excluded from accessing mainstream finance,” McDonald said.

They term that ‘mid-cost’ credit. I would call it daylight robbery and they are not far from the only ones at this game. 

The company says it speaks to every borrower and guarantor before a loan is paid out and in the UK it only lends to 15% of people who start an application.

It is keen to distinguish itself from other moneylenders and claims its fixed APR of 49.9% is the fifth lowest rate of any licensed moneylender operating in Ireland.

“It is 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,” Hawkins said.

We are an online proposition supported by real human beings, with loans collected via traditional methods such as direct debit or online debit card payments.

There are currently 38 licensed moneylenders on the Central Bank’s register. Many of them charge an APR of around 200%.

The company with the highest rate is, Stillorgan based, Southside Finance which charges nearly 288%.

Amigo currently employs 10 people in its Dublin office.