“I call and say to them ‘I actually saw you last Tuesday picking your kids up from school’. That’s usually suggestive and it engenders the fear needed,” said Kevin (not his real name).
Working in ‘Asset Reclamation’, another term for money-lending, Kevin operates in many parts of Ireland, including the midlands. He receives a 10 percent commission on all monies he collects and among his client base are some of the region’s most vulnerable individuals and businesses.
“If it wasn’t me, it would be someone else and I’m definitely not the worst guy out there but my motivation is mainly financial,” said Kevin who has been involved in money-lending for over 12 years.
Illegal money-lending is a hidden world and according to Kevin, the money which finances it comes primarily from drugs, protection and prostitution. On the legal side (sub-prime), much of the investment comes from the Far East, Middle East and Eastern Europe.
Kevin also deals with the commercial sector, many of whom are businesses linked to the once buoyant construction industry, e.g. wholesalers, sub-contractors, sole traders. It also includes licensed premises such as betting offices and pubs.
“It is only when a lender is unsuccessful in getting their money back that they will employ somebody like me – someone who works on a percentage of monies reclaimed. I make contact with the borrower, tell them who I am and explain the situation. I ask them what is their intention in terms of honouring the loan,” he said.
He continued: “If they are not showing a willingness to pay, the course of action would be ringing them daily and engaging in verbal intimidation. I obviously threaten them with physical harm and eventually I pay them a visit. Nine times of ten, they pay.”
Asked if his actions have ever been reported to the Gardai, Kevin said: “A person could report me but everything is done in such a way that I don’t leave myself liable. I make it very hard to prove.”
Kevin has seen a definite demographic change in his client base over recent years.
“There was a time when it was called a lower-class service. Today though, you have bank-workers, state employees and so on. These are people who had no problem getting a line of credit five years ago,” he said.
Sub-prime lending interest rates are typically up to 30 percent APR, once the borrower is meeting their repayments. This can however change if repayments are missed. In recent years, Kevin believes that some 70 to 80 percent of borrowers have run into difficulty with their repayment schedule.
“What happens next depends on the contract. And yes, people are very naive when they enter these contracts. Sometimes the sum you are meant to pay this month is added to the principal – so not only are you missing a payment, you are being charged an extra payment as well.
“Another way is that your principal might not change but your arrears on the loan can accrue interest monthly, even weekly sometimes, at 200 to 250 percent. Once again, it depends on the contract,” said Kevin, who deals in amounts anywhere from p5,000 to p100,000.
Commercial loans usually have interest rates of 25 to 30 percent APR, and vary in amounts up to p100,000 with a typical term of six months, though this can extend to one year.
“The number of commercial clients has increased significantly. It is because liquidity has dried up at the banks. People wouldn’t be coming to the people I work for if they could get money elsewhere,” he said.