A government-backed scheme using Credit Unions to provide low-cost loans was rolled out nationwide in 2018 . These small loans with low-interest rates are known as Micro Credit. The loans are called It Makes Sense loans – and aim to provide small, low-interest loans for people on Social Welfare or State Pensions aged 18 or over.
The banks don’t normally lend money to people on social welfare or the state pension – so low-income families sometimes have to use moneylenders with high-interest rates . These Credit Union loans should reduce the reliance on high-cost moneylenders.
The maximum interest rate that credit unions can charge for an It Makes Sense loan is 1% a month (which is 12.6% APR). For example- at a rate of 12.6% APR – a €500 loan over 6 months would be charged total interest of €15.72.
Moneylenders in Ireland charge can sometimes charge interest rates as high as 188% APR when collection fees are included. A €500 loan at this rate would end up with interest charges of €173 over 6 months.
For comparison – the lowest interest rate available on a personal loan from a bank is about 8.5 %. See the list of the best personal loan rates here.
These Micro Credit loans can be for any purpose, including repayment of outstanding debt. The loans can be taken out for a minimum period of one month up to a maximum of 2 years. The minimum loan amount is €100 and the maximum amount is €2,000.
Credit Union Membership:
Applicants for a loan will need to become a member of the credit union – and anyone can join on the spot and be considered immediately for one of these loans. (provided that they live in the local area).
Usually, loans will be granted within 24 hours of becoming a credit union member and making an application.
Loan repayments are made by deductions each week from social welfare or pension payments via the Household Budget Scheme or by direct debit or standing order from a bank or credit union account.
These It Makes Sense loans are now available nationally –
An up to date list of Credit Unions that are issuing these It Makes Sense loans can be found here
People in receipt of the following will be eligible to apply:
Note Being in receipt of social welfare does not entitle a potential borrower to a loan. The decision to grant a loan remains with the credit union.
Back to Work Allowance
Back to Work Enterprise Allowance
Jobseeker’s Allowance (and Jobseeker’s Transitional payment)
State Pension (Contributory)
State Pension (Non–Contributory)
One-Parent Family Payment
Widow’s, Widower’s or Surviving Civil Partner’s (Contributory) Pension
Widow’s, Widower’s or Surviving Civil Partner’s (Non–Contributory) Pension
Back to Education Allowance
Supplementary Welfare Allowance (basic payment)