Advice regarding Wonga

SeanG79

John1993 wrote: »

"Turnover" is often a horribly misleading term in finance, and so is rarely used. Income would make more sense. The data show that it wrote off over 40% of all of its income in that year.

Also, to put things into perspective, £45, is pretty pooor foor a financial company. A single swaps desk in an investment bank (circa 10 staff) would be exppected to make hundreds of millions each year.

As another comparison, my first desk had a retun on equity of 450%, despite "charging" about a quarter of a hundredth of a percent interest on each deal.

Basically, when the only product is money, the percentage returns need to be looked at very differently to when the product is a consumable or a product.

I'm not sure how you are reading their business accounts BUT the 40% cost of sales is not "written off", its what their money costs them to buy...

As for your desk return, it cannot be compared to a companies accounts...they "apples and oranges". please tell me which investment bank with circa 10 staff would make hundreds of millions of £'s in PROFIT each year.

As an example ING lease UK who were one of the largest a prime lenders in the UK asset finance market with a very strong lending book with some of the lowest defaults in the industry, turned over £158 million with a profit after tax of £38 million in the same financial year

and finally it doesn't matter what the product is, whether it is bread or money or a service that you are selling ALL the business principles are exactly the same, they have a cost to bring in and a "sale" price leaving a profit/loss and a margin

John1993_2

SeanG79 wrote: »

I'm not sure how you are reading their business accounts BUT the 40% cost of sales is not "written off", its what their money costs them to buy...

As for your desk return, it cannot be compared to a companies accounts...they "apples and oranges". please tell me which investment bank with circa 10 staff would make hundreds of millions of £'s in PROFIT each year.

As an example ING lease UK who were one of the largest a prime lenders in the UK asset finance market with a very strong lending book with some of the lowest defaults in the industry, turned over £158 million with a profit after tax of £38 million in the same financial year

and finally it doesn't matter what the product is, whether it is bread or money or a service that you are selling ALL the business principles are exactly the same, they have a cost to bring in and a "sale" price leaving a profit/loss and a margin

No, they wrote off 41% according to the figures. That's not costs of funds, it's money they put down as irrecoverable.

You do seem quite confused, I'm afraid ,in your post above, at one point saying that I can't compare my financial business with wonga's, and then going on to say that all the principles are the same.

My ppoint was the latter, the principles are the same, and compare Wonga with other companies and you see that their profitability is not huge, and that they write off a similar proportion of revenue to that which they retain.

Oh, and my desk return absolutely can be, and was comparable to a business's accounts, as that's exactly how erformance was measured. It had capital allocated, revenue, costs, risk capital needed, and so on. I'm not sure why you'd think that you know my own business better than me, the one ran it, but you quite clearly don't.

I'm sorry, but you are comming across here as a typical "internet expert", who is not actually very familiar with the subject, but who wants an argument for the sake of being right. If you want to understand more about the franchise model of certain desks in banking then I'm happy to explain, but please don't start by telling someone who runs a desk how their finances work, it just makes you look foolish.

SeanG79

I am wrong in that the accounts filed show turnover as the total revenues as opposed to total lending and the cost of sales is the 40% of that revenue.

Wonga debt write off's equate to less (approx 7% - according to Errol Damlin of Wonga) than credit card bad debt write off's (approx 10%).

Anyway because you are an "expert" as opposed to an "internet expert", the bottom line is much to your surprise

With customers like this, I'm surprised that Wonga can evver turn a profit

and in spite of the 41% write off's they produce a rather healthy profit.

Anyhow I will leave you to run your desk and its £10's of millions of profits whilst I continue to look foolish and think that £45 million profit is decent for a business of that size.

ImMeSoHi

Oh hell bent if someone actually asks for advice on here!!

So sorry I didn't give you my life story on how I intended to pay the loan back and you immediately jump to the assumption that I didn't intend to pay it back. I didn't plan to be off sick from work with pregnancy reasons but this stuff happens and you deal with it the best you can.

To those of you that have offered advice I thank you and will take onboard your advice, to the rest of you that jump on the bandwagon of 'you took a loan out but you obviously had no intention to pay it back', no wonder people don't stick around here for too long if that is the sort of attitude you have to people looking for helpful advice.

I had every intention of pay this loan back, my partner and I had worked it all out but unfortnately the money we had expected to use for it has had to be used elsewhere (do I need to tell you where it was used??) hence how we are in this sticky situation. We have no one else that could have helped us out, we have used Wonga before in the past when we have run short and paid them back before the due date so get off your high horse, not everyone is perfect.

sharp82

You must have enjoyed the debate on Wongas profit margins though?

You need to call them before 10am on the day you are due to pay, and tell them you are having difficulty repaying. They will make a form available to you on the website, fill it in and agree a payment plan.

They will go for 2 months first, then 3. If you cant pay in 3 months then they will refer you to their hardship people....

They should freeze interest, however they are no obliged to

matttye

You-kip wrote: »

It really begs the question on how Wonga actually profits as not trying to stereotype but it seems most people going by this forum only seem to take out wonga loans when they now full well they have no intention whatsoever of paying it back.

Most people who take out Wonga loans are over stretched and mainly skint so surely this must tell the Wonga team that getting back repayments on some of these customers may well never happen.

Ahh, that old chestnut.

You can't take what is said on a message board as a conclusive result, because most people only post when they need help with something, i.e. when they have a problem.

Not many people would post just to say "Just took out a Wonga loan and paid it back in full and on time, go me!"

That said, the very idea of a short-term loan to last you until payday is asking for trouble, as it's clearly aimed at people who can't manage from payday to payday.