MSE News: 'About bloody time' - payday lending crackdown

antrobus

JuicyJesus wrote: »

Wonga's default rate has been quoted at about 50%, and Wonga are one of the more scrupulous payday loan companies.

If Wonga had a default rate of 50% they'd be even more bust than the Co-Op Bank.

It's actual default rate is 7.4%.

http://www.independent.co.uk/news/uk/home-news/payday-lender-wonga-rakes-in-over-1m-in-profits-a-week-8795915.html

Brains64

antrobus wrote: »

If Wonga had a default rate of 50% they'd be even more bust than the Co-Op Bank.

It's actual default rate is 7.4%.

http://www.independent.co.uk/news/uk/home-news/payday-lender-wonga-rakes-in-over-1m-in-profits-a-week-8795915.html

More likely yes, I think there is some communication breakdown over the term 'default' because in the instance where someone who's taken out a loan runs into difficulties paying back under the initially agreed terms, that isn't necessarily a default at that stage, you can call it that but the payday lender won't treat it as a real default until they have established what the problem is with the customer and whether or not there's a chance they will see their money, I can imagine that there will be a fair number that will run into such difficulty, I myself ran into difficulties paying back loans, have to say, I found Wonga very reasonable despite what I'd read about them in the papers I didn't get their debt collectors banging on my door or anything heavy like that, they accepted more suitable arrangements for me, there are arrangements that can be made to pay back in a more suitable way, payday lenders like Wonga are confident about lending for the simple reason that they know that one way or another they'll get their money 95% of the time , a real default is when the pay day lender has to completely write it off which will be very rare, that would be more like within the 7.4% which they could wear as a company, as you say, if they had to write off half of the money they lent out they'd be in trouble.

cepheus

JuicyJesus wrote: »

Wonga's default rate has been quoted at about 50%, and Wonga are one of the more scrupulous payday loan companies.

According to Robert Peston

[Wonga] rejects 60% of applicants and has a default rate on its wholly unsecured personal loans of just 7.5%

cos_2

Brains64 - I liked what you posted but thought it was all crammed together. I hope you don't mind me re-posting and re-jigging it


More likely, yes; I think there is some communication breakdown over the term 'default'.

In the instance where someone who's taken out a loan runs into difficulties paying back under the initially agreed terms, that isn't necessarily a default at that stage.

You can call it that, but the payday lender won't treat it as a real default until they have established what the problem is with the customer, and whether or not there's a chance they will see their money.

I can imagine that there will be a fair number that will run into such difficulty. I myself ran into difficulties paying back loans. I have to say, I found Wonga very reasonable despite what I'd read about them in the papers.

I didn't get their debt collectors banging on my door or anything heavy like that, they accepted more suitable arrangements for me. There are arrangements that can be made to pay back in a more suitable way.

Payday lenders like Wonga are confident about lending for the simple reason that they know that one way or another they'll get their money 95% of the time. A real default is when the pay day lender has to completely write it off which will be very rare. That would be more like within the 7.4%, which they could wear as a company, as you say.

If they had to write off half of the money they lent out they'd be in trouble.