With finances growing ever tighter throughout the island of Ireland, it is perhaps no surprise that both payday and quick loans are increasing in popularity with each passing day. These services claim to offer customers small, affordable loans over much shorter periods than traditional lending institutes in a bid to help ease shortfalls in short term cash flow.
While the idea itself is sound - we're sure everyone can remember times in their lives where they needed some money as a matter of urgency (perhaps between pay days, or to pay for a sudden, unexpected expense that had arisen) - the danger is that people can become trapped in a spiral of continually rising levels of interest repayments due to an over reliance in short term, or quick loans.
The problem isn't with the amount of money that these companies offer, far from it, in fact most will have quite a low ceiling on loan amounts so as to minimise their own exposure to bad debt. The problem instead lies with the extremely high interest rate attached to the loans themselves.
One good example is found at one high profile Irish creditor. They claim to offer sensible credit with low loan ceilings for short term borrowing to get people through tough financial times. This in itself is an accurate statement, they do indeed offer a service that would be perfectly fine for anyone would could afford the 157.3% APR given in the example on their website.
In this case, a person borrowing a moderate sum of €500 would it back at just €15 per week over 52 weeks, resulting in a total repayment of €780 - a fixed borrowing rate of 56%. In the case of someone really struggling to make repayments on bills, this is potentially crippling.
The sad fact is that people in perilous financial positions will often forsake the long term in a bid to simply survive for the short term, and with such readily available quick loans, Ireland faces the real possibility of its poor economic state worsening with time.