Moneylending is the practice of giving cash loans or supplying goods or services, when the debt is repaid at a high rate of interest over a short period. Banks, building societies, insurance companies and credit unions are not considered moneylenders.
Moneylenders are generally individuals or companies whose main business is to lend money. They must hold a licence to trade in moneylending. The Central Bank of Ireland regulates the activities of moneylenders and is responsible for issuing moneylending licences in Ireland.
- Before granting a moneylending licence, the Central Bank will consider a range of factors, including the trading background and reputation of the moneylender and how much they propose to charge for credit.
- Licences are renewed each year.
- The Central Bank maintains a register of licensed moneylenders.
A moneylending agreement is defined as a credit agreement where one or more of the following apply:
- The agreement or negotiations or both were conducted at a place other than the business premises of the moneylender or the supplier of goods or services under the agreement.
- You (the customer) will or may make repayments under the agreement to the moneylender or their representative at any place except the business premises of the moneylender or the supplier of goods or services.
- The total cost to you of credit under the agreement exceeds an APR (annual percentage rate) of 23% or such other rate as may be prescribed.
Under the Central Bank’s Consumer Code for Licensed Moneylenders, your lending agreement must give you details about the loan and your moneylender must also tell you that the loan has a high cost.
The lending agreement must:
- Be in writing and include the names and addresses of all parties to the agreement
- Show the total amount loaned, the rate of interest, the total amount payable (the cost of credit) and any collection charges that may apply (and the lender cannot add any other charges, such as administrative costs)
- Be signed by both you and the lender
The lending agreement must also state that you have a right to a 10-day ‘cooling-off’ period, when you can inform the lender in writing that you have decided not to proceed with the loan. If you and the moneylender agree that neither of you wish to observe the 10-day cooling-off period, you must sign a separate part of the agreement stating that you consent to waive your right to a cooling-off period.
You must get a repayment book, separate to the lending agreement, which states the total amount of the loan and the total number of repayments due. Each time you make a payment, the amount and date must be written in the book. Some moneylenders issue loan statements, which set out the same information, instead of a repayment book. The moneylender must keep a record of each lending agreement.
- Many moneylenders collect loan payments in cash each week, and include a collection charge for this service.
- Moneylenders must give you the option of paying at their business premises to avoid the collection charge.
- Some moneylenders allow you to pay by direct debit.
- Any collection charges must be outlined in the lending agreement before you sign it.
- If the moneylender sends an agent to your house to collect payment, they must give the agent written authorisation to do so (generally in the form of an ID card). The agent is only allowed to collect repayments and cannot start or agree to new loans.
- The moneylender or their agent can only call to your home from Monday to Saturday between 10am and 9pm. If you have agreed in writing beforehand, they may make the collection between 8am and 10am. A moneylender cannot contact you on Sundays or public holidays and they must not contact your employer or your family without your written permission.
- Under Section 11 of the Non-Fatal Offences Against the Person Act 1997, it is an offence to demand payment of a debt in a way designed to alarm, distress or humiliate. This includes blackmail and extortion. (Extortion means using intimidation or the threat of violence to obtain money, information or anything else of value from another person.) Read more about debt collection.
- A moneylender’s loan will generally have a higher APR (Annual Percentage Rate) than a loan from a credit union or a bank. The APR will be at least 23% and may be much more in some cases.
- As with all loans, you should look at the total cost of the loan. That is, the amount of extra money you will have to pay back over and above the amount of the original loan.
- The amount you have to pay back on a moneylending loan stays the same, no matter how long it takes to pay back the loan. This is because moneylenders are not allowed to charge any extra interest or charges over and above what they are licensed to charge and what they have stated they will charge at the start of the loan.
- Moneylenders are not allowed to offer you top-up loans or a second loan to pay off the first loan, as this would place you further in debt. They are also not allowed to take an amount from the overall loan and treat it as a first repayment.
If you fall behind on repayments
- If you fail to pay one or more instalments due under the lending agreement, the moneylender may take legal action. They must give you 21 days’ written notice that they will take such action, and must give an estimate of the legal costs you may have to pay.
- After you receive notice of legal action, you have 21 days to pay the instalments before legal action can begin.
- If you persistently fail to pay instalments during the period of the loan, the moneylender may get permission from the courts to start legal action immediately, without waiting 21 days.
Illegal or unlicensed trading
- It is unlawful to offer moneylending services without having a licence to do so.
- The Central Bank and Irish Financial Services Regulatory Authority Act 2003 increased the penalties for illegal trading in moneylending to a fine of up to €63,486.90 or up to five years’ imprisonment, or both.
- If you think you have dealt with an illegal moneylender or know the identity of someone you believe to be an illegal moneylender, you should contact either the Competition and Consumer Protection Commission (CCPC) or your local Garda station. The CCPC can give advice on whether the moneylender is trading illegally and how to proceed with your complaint. Only the Gardaí can take legal action against illegal moneylenders.
- If you are experiencing difficulty in paying off a loan, you should contact your moneylender as soon as you can.
- If you cannot sort out the problem directly with your moneylender, you can get help by contacting MABS (the Money Advice and Budgeting Service, a free and confidential service for people in Ireland with debt or money management problems.
More information about moneylending is available from the Central Bank, including Consumer Protection Code for Licensed Money Lenders
Where to apply
If you wish to apply for a moneylending licence, contact: