MSE News: Wonga responds to US debt comparison jibes

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  • RobertoMoir
    RobertoMoir Posts: 3,458 Forumite
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    edited 23 September 2011 at 11:13PM
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    PaulW922 wrote: »
    To be honest, if you are going to attack short term lenders I think Wonga is the wrong target. So many PayDay lenders charge a fixed fee regardless of how long you borrow for and do not allow you to save money by repaying early. Wonga does none of those things and offers tools on its website so you can see how much different options would cost.

    Wonga might well be the best of the payday / short-term (or whatever they want to call themselves) companies but this is a bit like being taller than Danny De Vito, if you see what I mean.
    PaulW922 wrote: »
    It also offers borrowers who cannot afford to repay the option to extend the loan for a couple of months, whilst still paying off fees and charges and to a degree avoiding a PayDay loan spiral, (although i would think it is still relatively easy to get into one with Wonga)

    As you say, its easy to get into debt spiral with them. This might not be the companies fault in particular; people who are on the abyss can go to a company like them in good faith then have a further run of bad luck and end up in real financial difficulty. However, their business model does position them as effectively lenders of last resort to people who often don't seem to understand the consequences of debt (and indeed seem to be unable to understand what they're signing up to at all even when its explained to them afterwards). This is not a good thing.
    PaulW922 wrote: »
    This whole APR thing with short term lending is a bit of a joke because it does not allow you to make a fair comparison between different short term lenders. It is all very well saying that x lender charges 5000% APR but equally another that charges a fixed fee regardless of the period could have an APR of millions of % - how on Earth can anyone understand that?

    Yes the APR thing is a joke - we often see posts in the loans forum from people exclaiming over what a rip off the short term loan companies are because they've seen that huge APR touted on an advert. Whatever you think of the number and whatever you think of it having to be included in their advertising, it clearly does nothing to help customers understand the cost of their borrowing when applied to short term or payday loans.

    On the whole, as a few people say, if you understand how payday loans work there's nothing wrong with them. That's certainly correct... but far too many of their customers who come here for help don't understand how it works and don't understand how its now costing them so much and are woefully ill-equipped to sort it out.

    Perhaps that's not the fault of Wonga and their competitors. Perhaps they're stopping people going to "Bermondsey Dave's Legbreaker loans" (whose APR rates are said to be "painful") which is a good thing... but I'd still hesitate to suggest using companies like this to most people.
    If you don't stand for something, you'll fall for anything
  • Stryder
    Stryder Posts: 1,134 Forumite
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    The bottom line is that with these loans, most people with a good banking history and overdraft will get them SIGNIFICANTLY cheaper. So who does this help? People with a bad banking history and no cash, temp. or otherwise.

    In other words, the sort of people who may find themselves in trouble by taking out such a loan.

    We need better banks, banking advice and access, and not greedy loan dolphins (sure I would get sued if I said the other)
    ............... Have you ever wondered what
    ¦OO¬¬ O[]¦ Martin would look like
    ¦ _______ ¦ In a washing machine
    ¦ ((:money:)) ¦
    ¦
    ¦
    ¦''''''''''''""""""¦
  • Just one other quick point - the Which? report released this morning on payday lenders show that based on borrowing over 30 days Wonga are the most expensive lender on the market, bearing in mind many other lenders charge set amounts for a loan regardless of the duration. A loan for 30 days from Wonga costs over £36 in interest, compared to £25 from Payday UK. Wonga's slide bar daily interest capacity in some cases allow them to be much cheaper than their rivals, however it also allows them to charge much more.

    Just a little thought, however doesnt change my opinion the industry needs massive re-regulation ....
  • dealer_wins
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    Nothing wrong with Wonga's business model, wish I had the idea, the capital and the balls to start it myself.

    I would advise people NEVER to take a payday loan, but 1000s of people do so. And its always the ones who promise to pay it back but then dont who get into problems.

    It comes back to the fact that if you are going to borrow money and agree to pay it back on X date, then pay it back, period.
  • 'dealer wins' - I agree with you on one extent, I would also advise people NEVER to take a payday loan, however I do disagree with your point that its always the ones who promise to pay back and dont that get into problems....

    The first 50 odd of my loans were paid back on time, didnt miss a payment. Had I defaulted on my first loan and came to an alternative arrangement, none of what transpired afterwards would have come to pass - it was paying back on time that was part of the problem!

    The real answer is there is no single point or 'fact' that will solve the payday loan problem, it is a culmination of many different factors, with blame and fault on both sides.
  • stoneman
    stoneman Posts: 4,521 Forumite
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    edited 24 September 2011 at 4:51PM
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    'dealer wins' - I agree with you on one extent, I would also advise people NEVER to take a payday loan, however I do disagree with your point that its always the ones who promise to pay back and dont that get into problems....

    The first 50 odd of my loans were paid back on time, didnt miss a payment. Had I defaulted on my first loan and came to an alternative arrangement, none of what transpired afterwards would have come to pass - it was paying back on time that was part of the problem!

    The real answer is there is no single point or 'fact' that will solve the payday loan problem, it is a culmination of many different factors, with blame and fault on both sides.
    How many loans have you had, you mention the first 50 were settled on time:eek:
    Sorry mate/madam, you just sound like someone who refuses to take responsibility for your own actions and is looking for a scapegoat.
    My advice, reel it in.
    The common law of business balance prohibits paying a little and getting a lot. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.
  • haremscarem
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    Blah blah blah... Wongas dodgy, there adverts are dodgier. Avoid. It has terrible business ethics and are impossible to deal with even if you never had a loan with them. Just google the company name and add 'fraud' or 'scam' or any generic term like that and see the accounts of people who have had cash removed from bank accounts when they didn't authorize it, or other such delights. I'm sure many people have trouble free accounting with them, but I am yet to meet one in person.

    My brother had over £350 quid taken from his account, never dealt with them, do you think he could actually talk to someone to get it back? Nope. Not even a sniff at the emails... Only police intervention scared them enough to return the money.
  • 2sides2everystory
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    Payday Loan (PDL) customers who understand how much they are expected to pay back in total to the PDL and then borrow it anyway clearly do not understand money or its worth or what the hell they are doing.

    The kindest thing you can say is that sometimes people just like throwing money away on things they believe do no harm and from which they get a little enjoyment or diversion from reality i.e. anything from prostitutes to amusement machines to Euromillions Rollovers and indeed PDLs. Only two of those are known to come back and bite you directly but they are all bloody daft.
  • stoneman wrote: »
    How many loans have you had, you mention the first 50 were settled on time:eek:
    Sorry mate/madam, you just sound like someone who refuses to take responsibility for your own actions and is looking for a scapegoat.
    My advice, reel it in.

    Stoneman, with respect, you are about as incorrect as one person could get .... look at my earlier posts, infact look at my website, look at any article / blog I have ever written for anyone - in fact, read my book! Never at any single point have I 'refused to take responsibility for my own actions' and your comments suggest a complete lack of research. I have lost count of the many, many times I have labelled myself as an irresponsible borrower, how I have been the architect of my own demise. I have never hidden from my own blame, my own fault. If I had a pound for everytime I publicly blamed myself for part of the fault, I wouldnt be in debt right now! The only other thing I have been guilty of if trying to justify my opinions that JOINT accountability for my loan history has to be shared between me and the lenders I have associated with.

    For the record, it was 64 loans, between a dozen lenders over a period of just over 18 months. During that time I was declined just once by the army of responsible lenders out there.

    My advice - research, understand, comment.
  • Enfieldian
    Enfieldian Posts: 2,893 Forumite
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    Slow "news" day/week/month/year on MSN

    "Say No To Payday Loans" You have a problem with budgeting and your expenditure.

    50 Payday loans over 4 years would equate to about a year's salary !!!!ed away.
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