Wonga.com

Snakeeyes21

MyRubyRed wrote: »

That is probably why they come here looking for help but I'm obviously wrong

I dont think the OP came looking for help.
From what I read its somebody bashing a perfectly legitimate company because they dont know how an APR works.

Alot of people who use these companies myself included see them as the lesser of two evils.

Say your getting paid late this month and a few direct debits are going to bounce, the bank will charge you £75, the payday loan company will charge you £25 per £100 borrowed (less with wonga as they charge interest per day so £100 for a week will cost £13), who are the real crooks?

Bob_Jones_2

Snakeeyes21 wrote: »

I dont think the OP came looking for help.
From what I read its somebody bashing a perfectly legitimate company because they dont know how an APR works.

Alot of people who use these companies myself included see them as the lesser of two evils.

Say your getting paid late this month and a few direct debits are going to bounce, the bank will charge you £75, the payday loan company will charge you £25 per £100 borrowed (less with wonga as they charge interest per day so £100 for a week will cost £13), who are the real crooks?

Exactly imagine if the banks had to represent overdraft fees as an APR?

littleangels3

ive used these in the past, yes apr is ridiculous but sometimes its a case of needs must, were not idiots its just a quick and easy way to get cash, ive certainly learnt my lesson and wouldnt touch them again but its a vicious circle once you start

BLT_2

Whilst I agree with the OP that an interest rate of 2498% would be somewhat usurious it needs putting into perspective.

a. The loans are usually over a month and hence the interest rate is not valid in the way it has been presented
b. This is a high risk business, I have no idea what the default on repayment of loans is but I suspect it is reasonably high.

At the end of the day it all comes down to personal choice. If an individual logs onto a payday site, sees an APR of 2498% and goes ahead this is his right, if you take away these companies what fills the gap for the truly desperate with a short term requirement and no access to regular loan facilities (and I note snakeeyes very valid point on the real costs of these loans).

This reminds me of the situation with young children making Nike Balls for 50p a shot. An uproar ensued, the company pulled out and the families starved :-).

Bob_Jones_2

Its a different segment but still relevant. The Competition Commission stated in their April 2006 Final Report on Home Credit that.

“the APR is a particularly difficult measure to interpret, and may be more so in the context of home credit, where APRs are often very high and are not a good basis for comparison of loans.”

Apples2

I wasn't implying the people who USE payday loan companies are idiots, just the people who have no clue as to why the apr is so ridiculous and shout out about banning these companies.

Snakeeyes21 has described the usefulness of them quite well.

When your back is against a wall, they do offer a cheaper way out than the mainstream (so long as you pay it back of course).

RobertoMoir

Bob_Jones wrote: »

Exactly imagine if the banks had to represent overdraft fees as an APR?

Interesting idea. And by interesting I mean scary. This place would need to buy some bigger web servers and sign up everyone who'd been here more than a month as board guides just to begin to cope.