DUBLIN, Ireland–A high-rate “moneylender,” as the companies are known in the United Kingdom, is set to expand into Ireland.
The company, Amigo Loans, said it is seeking to fill a “glaring need” by targeting people who have been turned down by traditional lenders, and offering loans of up to €5,000 at an annual rate of 49.9%.
Amigo Loans, which has more than 200,000 U.K. customers, operates a guarantor model whereby it lends to “people with bad credit” who are backed by friends and family with a better credit rating, according to the Irish Times.
“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, told the Irish Times.
Terms on the loans run to three years after initially seeking to offer terms as long as five years. The regulator, however, believed a five-year term would make the loans too expensive for many borrowers.
In a statement that would surprise many in the U.S., Amigo Loans said the APRs it charges are actually the fifth lowest maximum APR of all moneylenders operating in the Irish market, the Irish Times reported.
A ‘Fair Rate’
“The rate we charge is a fair rate for the product we offer,” Hawkins told the publication, adding that it looks to lend to “good hard working people who’ve been turned down for reasons such as credit rating.”
According to the company, to apply for a loan with Amigo an applicant will need a guarantor – 35% of guarantors are parents, and 75% are close family–to step in and make a repayment if the borrower is unable to do so.
Amigo told the Irish Times that in the UK 25% of loan applications are typically household related, such as borrowing for a deposit for a rental property, with another 25% for a car loan.
Rather than making an assessment on credit ratings, Amigo said it makes its lending decisions “strictly on affordability” and will require Irish borrowers - and guarantors - to have a buffer of €100 for the former and €150 for the guarantor, left over each month once all expenses and loans have been accounted for. In the U.K., only about 15% of applicants successfully receive a loan, according to Amigo, the Times reported.