Consumer and personal loans for unemployed people in Ireland

What a consumer loan is, and what it is not

A consumer or personal loan is a lump sum that you repay in fixed instalments over an agreed period, usually for a purpose that is not a house purchase or a business. In Ireland you can borrow for household goods, repairs, education costs or to consolidate small debts, subject to the lender's criteria.

It is not the same as a social welfare payment such as the Additional Needs Payment, which helps with essential costs you cannot meet from your income and is not a loan. If your need is urgent and essential, such as a broken cooker or a deposit, ask your Intreo office about that route first, then consider borrowing.

Three kinds of lender you are likely to meet

Banks and finance companies price the loan by your financial profile and credit history. Credit unions are member-owned and lend to members who live or work in their area. Post offices and other intermediaries can introduce you to a lender but are not always the lender themselves.

For someone without a wage, the differences matter. A bank applies its scoring to benefit income, while a credit union may also take account of your history with it, your savings and your local circumstances. Neither will lend if it doubts you can repay.

An Post Money loans: the published terms

An Post Money offers fixed-rate personal loans of €5,000 to €75,000 over one to ten years. The loans are provided by Bankinter, with An Post acting as a credit intermediary. The published APR for loans between €5,000 and €19,999 runs from 8.4 per cent to 19.9 per cent, depending on the applicant's financial profile and credit history.

The application checklist mentions a recent payslip alongside proof of identity, address and PPS number. If your income is a social welfare payment or a partner's wage, ask what documents the lender accepts in place of a payslip before you apply, so that you do not leave a search on your record for nothing.

Credit unions: Capital Credit Union as an example

Capital Credit Union lists personal loans with decisions usually within 24 hours, no penalty for early repayment, weekly, fortnightly or monthly repayments, and no hidden transaction fees. Free loan protection insurance is mentioned too, subject to its terms. Members can apply online, and non-members can send an enquiry through the website.

The page does not state loan limits, so ask for the current rate and the maximum you could borrow. Credit unions elsewhere have their own conditions, which is why it is worth contacting the one closest to where you live. The Irish League of Credit Unions explains that no credit union can charge more than 12 per cent a year, or 12.68 per cent APR.

What a loan costs: a published example

The Irish League of Credit Unions publishes an example that makes the arithmetic plain. A loan of €3,000 over three years at 12.68 per cent APR is repaid in 36 monthly instalments of €100.62, a total of €3,622.32. The cost of credit is therefore about €622.

Your own offer will differ, but the method works every time: multiply the instalment by the number of payments, subtract what you borrowed, and you see what the credit costs. Then ask whether the item is worth that sum, or whether saving for a few months, or buying second-hand, would do.

The MABS checklist before you sign

The Money Advice and Budgeting Service (MABS) suggests asking whether you need the item now or could save for it, and testing affordability with its free My Budget tool. It also recommends a trial run: put the repayment amount aside for a while and see whether you manage.

Lenders check the Central Credit Register, and you can request your own report and correct errors. MABS lists the questions to answer before you commit.

• What is the total cost of the credit over the full term?
• What happens if you miss a payment?
• Have you compared other lenders?
• Have you read the key information and understood it?

Pitfalls when money is tight

High-cost credit is the main danger. MABS points out that licensed moneylenders can charge APRs of up to 187 per cent, and that unlicensed lenders offer no Central Bank protection at all. Buy-now-pay-later accounts can look harmless but add commitments the same way a loan does.

Never pay a fee to anyone who promises to secure a loan in advance, and be cautious about messages that arrive unrequested offering credit. If repayments already feel heavy, MABS offers free, confidential support on 0818 07 2000 and through 58 offices around the country.