MSE News: Wonga branded 'morally offensive' for targeting students

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"The payday loan firm is at the centre of outrage for encouraging students to take one of its mega-expensive loans ..."

Read the full story:
Wonga branded 'morally offensive' for targeting students

Duke203

Are the students over 18? Are they adults? Are they able to make their own decisions or do they need their hands held every time an advert appears in front of them?

The slow erosion of personal responsibility continues it's advance.

housebug

Where I'm from there's a name for all these on-line/tv money lenders. It's called loan sharking and it's illegal. So it should be here in the U.K.

maginot

Who should they target?
Payday loans are generally there for people who are unable to budget properly and would end up with high charges and APRs on other forms of credit. This is often the case with several students

It perhaps may be morally wrong to target students who don't have much financial skills, but that is what this business is for and as mentioned by the other poster, these people are adults!

Derivative

Would you rather have a person learn at age 18 that loaning money without the ability to repay it is bad, or at age 38?

sharpy2010

Every poster above has stated that the article provided by the MSE site is actually an erosion into personal choice. Sometimes it is best to leave things alone, as in the case of Wonga.

I, for one, am fed up of our country becoming like Cuba... No personal choice whatsoever.

Seems like someone else wants to fight my battles for me. LET ME FIGHT MY OWn!

dealer_wins

If only schools would teach household finance/budgeting as a subject, then maybe most kids would understand what a horrific ripoff payday loans are.

David1345

I'd say it's fine to target students, or anyone else, with advertising. The problem is that the service they then offer people on low incomes is totally unsuitable. Payday companies - not necessarily Wonga - seem so happy to lend stupidly large amounts to people who obviously cannot afford it. That's where morality comes into it, and that's how people get trapped.

If their lending policy was more restrictive/sensible, I really don't see a moral problem with making ultra short-term loans available. When I was a student, being able to borrow £50 and repay £65 a month later would have been really handy. It's not about who they target, but how they deal with those customers when they sign up...

opinions4u

David1345 wrote: »

Payday companies - not necessarily Wonga - seem so happy to lend stupidly large amounts to people who obviously cannot afford it.

Do you have any evidence whatsoever that they are happy when borrowers can't pay them back?

Do you really think their business model works that way?

Really?

im-lost

so what would martin suggest if a student is about to rack up £200 in bounced direct
debit fees because their wages from their part time job are late?

It is cheaper to use a payday loan company, rather than pay extortionate fees to the
banks, FACT

I take it Martin will be launching an interest free student loan to help students bypass
bank fees etc? what he's not? then he should pipe down and leave how people wish to
manage their finances to themselves.

What I find 'morally offensive' is the fact that students who are able to get these types
of loans are being labelled as kids by Martin, WongaLeaveKidsAlone, they are not kids
they are adults, whether Martin likes it or not.

But then again, Martin isn't one to shy away from jumping on a bandwagon is he..

If he cared to read the wonga advert properly, it makes no mention of a wonga loan
replacing a student loan, or even using such a loan on a long term basis, I think its
disgusting that Martin would deride a company that many thousands of people use
to SAVE money in place of paying massive fees to the banks instead.

Martin obviously thinks that students are children who are incapable of thinking for
themselves and making decisions that are right for them at a particular time.

As a student myself, all be it part time, I would like to see Martin appologise for
his comments about students being kids.

And the whole thing in the article about students not having a pay check coming in..
well that's all fine and dandy then, they will not be able to get a wonga loan if they
don't have an income.. an important fact overlooked by Martin in favor of a sensationalist
headline, unless of course, martin is suggesting students are fraudsters as well as kids?

jamesd

Students can also have short term funding needs of the type that a payday loan can be appropriate for so I don't object to that aspect.

I do have reservations about targeting marketing for high cost credit products at a group that is likely to be less financially aware than average adults. Payday loans in general are a sufficiently high risk product that I'm not sure it makes sense to permit marketing aimed at anyone under say 21, to allow time for an adult to use their ability to obtain credit and gain experience. This case looks too much like deliberately targeting a group made vulnerable by inexperience.

Added later based on this page:

"Paying off your student loan can take years and the chances are you'll have no idea what you spent it on.That's the problem with a student loan – it might work out cheaper than a standard loan, but you can easily get more than you need and be left with a nasty debt hangover after graduation.There's another way though – if you want to budget during uni, only take out the student loan that you think you'll need and if you need to borrow a small sum for up to a month to cover an emergency, you could top up your funds with a Wonga loan.As well as responsible borrowing, here at Wonga we also encourage students to shop around for everything from food to bank accounts and keep an eye on your finances so you don't end up with hefty overdraft fees."

That wording appears to merit a complaint to the OFT about irresponsible lending and misleading advertising. The cost of a student loan is so much lower than payday lending that it would make more sense to take out the larger student loan.