The "most vulnerable" members of Galway society may be able to take out small affordable loans of up to €2,000 to "meet genuine needs", if credit unions in the city and county sign up to the new It Makes Sense loan scheme.
This is the view of Galway City East Sinn Féin councillor Mairéad Farrell, who has welcomed the rolling out of It Makes Sense by the Irish League of Credit Unions across the State. The scheme may be made available in Galway in the near future.
It Makes Sense is a micro-credit initiative which provides smaller loans, with an average payment of €500, and with what Cllr Farrell called "reasonable and affordable" interest rates. "It provides the most vulnerable in society with small affordable loans of up to €2,000 to meet genuine needs," she said. "This can be especially helpful for families when it comes to managing back to school costs or at Christmas."
According to Cllr Farrell, the initial roll out of the pilot project, which took place across 30 credit unions, showed how the new scheme "provided a realistic alternative to loan sharks", while also highlighting the "reality that people have had to resort to interest rates of up to nearly 200 per cent from money lenders in order to access such small loans".
Credit unions can individually decide to join this programme and as yet, none has officially signed off on the scheme in Galway, although it is understood they are interested in taking part. One CU confirmed to Cllr Farrell that it was "hoping to be a part of this scheme" in "the near future" and will advertise "as soon as we are completely signed up".
However, Cllr Farrell warned that such a scheme on its own would not "eliminate the current money lenders" and that people may still have difficulty approaching any institutional body for a loan. She pointed out that other countries across Europe place a cap on interest rates, with "many are at substantially lower levels than in Ireland".
"With the extra payments, through the high interest rates, it is estimated that €93 million is being taken from often vulnerable people who cannot afford it," she said. "The ILCU judge this figure against two loans of €500 in a year. People will now finally have an affordable avenue created by the credit unions to access loans but the high interest rates of other groups will remain. With the political will necessary, these high interest rates can be addressed by the Government and through Central Bank regulations.”