Dr. Olive McCarthy:

I alluded to indebtedness in the opening statement and Dr. Byrne briefly mentioned it earlier. When repaying a credit union loan, for example, part of the repayment includes a contribution to savings so the borrower is building up resilience. When the loan is repaid, there would be a lump sum in savings that would support the borrower in not having to borrow again or slow down the rate of borrowing. With the moneylending model there are no savings built in so at the end of repaying the moneylending loan, the borrower is not in a better position because he or she has not engaged in any savings through the repayment. It is an important characteristic difference between more conventional finance and moneylending.

Of course, if a borrower is paying above the odds for a moneylending loan, this reduces a person's capacity to save anyway. That is how a person can end up getting trapped in a cycle because the reduced capacity to save means there is no opportunity to build up any kind of resilience over the course of the loan to ensure the borrower does not have to borrow again as quickly or at all. That is where the indebtedness element is relevant.