Wonga on brink of collapse

jonesMUFCforever

newatc wrote: »

No sympathy for Wonga as a company and perhaps their difficulties will help the other legal loan companies offer profitable realistic loans treating their clients as customers and not cash cows.

IMO there is a reason some bank customers don't get offered credit facilities - they don't pay it back - its that simple.
So Wonga were only going to succeed by offering huge interest rates with only a % needed for them to make a profit.
Now that they have to pay back customers there is no point in Wonga existing.

okidoodle

venison wrote: »

Big article in a sunday paper about bright house charging 99.9% apr on reconditioned goods and people ended up paying 3x what they could have bought for new, in my view that puts them in the same category as wonga etc
People also forget that used properly wonga loans could be less expensive than unauthorised overdrafts.

I can see that there is sometimes a need for a quick cash loan- for example if your boiler breaks or your car needs repairs and you need it to get to work. The thing about bright house is most of the items are available cheap from other sources - so why are you buying a washing machine at £8 per week when you can get one for much less from charity shops or community interest companies who offer deals to people in need (one near me actually offers essential items like fridges or cookers for free to people who have a letter from social services or another social welfare charity or organisation). Unfortunately Bright House has a shiny marketing campaign and conveniently located high street shops while the charities are stuck in a warehouse on an industrial estate.

Ian_875

okidoodle wrote: »

so why are you buying a washing machine at £8 per week when you can get one for much less from charity shops or community interest companies who offer deals to people in need

I think it's twofold

1. People don't actually calculate how much they'll end up paying. They just think "£8 a week? That's pittance". I think some people don't even equate that to being £32 a month. This is intentional on the part of Bright House, they get the 'sticker price' as low as possible. I'm sure if they could get away with saying it was only £1.14 a day they would.

2. Once someone has committed to looking at something for £8 a week, they're alot more willing to go for a higher spec model than they actually need. Let's say the model up is £10 a week. That's only an extra £2, it's easy to swallow without thinking how that £2 mounts up over the course of the agreement week after week.

Without generalising, the type of person that would go to bright house etc rather than look on Gumtree or second hand is the type that wants the newest and best, and as long as they can kid themselves that it's only a few quid a week will willfully ignore the APR and overall cost.

You and I both know that spending £100 for example on a second item vs £1000 on a new item is the better buy. Yes, it might break and need replacing sooner, but as long as it lasts a few months it's worth it as you'd need 10 of the £100 devices to break before it would make sense to get the £1000 model.

I'm simplifying somewhat, but hopefully I've managed to explain

For the record, I'd never use bright house (or get anything on credit really, I'm quite frugal), but the people of MSE aren't really the target audience.

DCFC79

okidoodle wrote: »

I can see that there is sometimes a need for a quick cash loan- for example if your boiler breaks or your car needs repairs and you need it to get to work. The thing about bright house is most of the items are available cheap from other sources - so why are you buying a washing machine at £8 per week when you can get one for much less from charity shops or community interest companies who offer deals to people in need (one near me actually offers essential items like fridges or cookers for free to people who have a letter from social services or another social welfare charity or organisation). Unfortunately Bright House has a shiny marketing campaign and conveniently located high street shops while the charities are stuck in a warehouse on an industrial estate.

Maybe those in need don't like to use the charity shop or community interest companies as don't want others knowing they

are getting a discount on white goods.

System

bxboards wrote: »

Because I believe that people who are genuinely working have no need of such loans in the majority of cases. Look right now, with historicaly low interest rates, and a minimum wage people are or should be much better of now than they have ever have been previously. What we define as 'poverty' here is laughable compared to genuine poverty in some 3rd world countries.

Again, I have an issue with high interest loans - for people in genuine need, I'd like to see interest rate reflect the base rate. I'm not defending Wonga, hence my use of the word 'usary' earlier.

But I'm sorry, but I believe that most of these loans were taken out for frivolous non essential purposes. The moon isn't made of cheese, I can assure you.

I forst took one out when y hosuing benefi hadn;t come through, so i needed money for rent, and fast. Cue wonga loan number one. I had to pay that back out of my esa. Which left me short for bills. So i took out another, and so on and so on. I wasn't on esa out of choice, i have bipolar, i couldn;t work because of it. I ended up trapped in a cycle of taking out a loan, paying it off and taking out another. Bipolar makes budgeting difficult at the best of times (and thats before you get to manic spending). I hate the fact i used them, my credit rating is pretty much trashed because of it. It wasn;t for non essentials unless you count keeping a roof over your head and the electric on or buying food as a non essential.

rhcp

Am I a cynic in thinking it is a convenient way to get out of paying the compensation claims. Put the company into administration, start a new company and buy it back without having to pay them.

Red-Squirrel_2

venison wrote: »

^ exactly at least wonga for all their many faults never knee capped anybody.

https://www.theguardian.com/business/2015/sep/25/teenager-killed-himself-wonga-cleared-out-account

http://www.dailymail.co.uk/news/article-5198373/Student-died-getting-payday-loans.html

https://www.thesun.co.uk/archives/news/654394/payday-loan-debts-killed-our-son-18/

https://www.independent.co.uk/incoming/ian-jordan-suicide-they-were-chasing-to-see-when-they-were-going-to-get-their-money-back-9638754.html

Red-Squirrel_2

Ian_875 wrote: »

2. Once someone has committed to looking at something for £8 a week, they're alot more willing to go for a higher spec model than they actually need. Let's say the model up is £10 a week. That's only an extra £2, it's easy to swallow without thinking how that £2 mounts up over the course of the agreement week after week.

Without generalising, the type of person that would go to bright house etc rather than look on Gumtree or second hand is the type that wants the newest and best, and as long as they can kid themselves that it's only a few quid a week will willfully ignore the APR and overall cost.

You and I both know that spending £100 for example on a second item vs £1000 on a new item is the better buy. Yes, it might break and need replacing sooner, but as long as it lasts a few months it's worth it as you'd need 10 of the £100 devices to break before it would make sense to get the £1000 model.

In my experience the kind of person who goes to Brighthouse etc. is the kind of person for whom £100 is a lot of money and more than can be found at short notice. They are people for whom £100 for a second hand washing machine may as well be £10,000.

Because of this, when they need to replace white goods, those cheap second hand options aren't actually available to them because you need the cash upfront. Going to somewhere like Brighthouse is actually one of the only options that makes it possible to get a new fridge/washing machine sofa when the old one is broken. They aren't people who have access to the cheapest credit or good rates on loans, because they are on benefits or on low and unstable wages and also because they are quite likely to have several payday loans and high interest credit agreements from Brighthouse etc already in the credit file. They think they can manage £8 a week, but then when the next £8 a week comes along, and the next, it gets too much, sooner or later there's not enough left to put any money on the electricity meter or the kids need new school shoes again or someone who had stopped smoking starts again due to the stress or Christmas is creeping closer and nobody wants to see their children do without any presents and that's when they turn to the likes of Wonga.

The biggest barrier to effective moneysaving is not having enough money in the first place. There's a reason poverty is described as a trap.

okidoodle

Red-Squirrel wrote: »

In my experience the kind of person who goes to Brighthouse etc. is the kind of person for whom £100 is a lot of money and more than can be found at short notice. They are people for whom £100 for a second hand washing machine may as well be £10,000.

Because of this, when they need to replace white goods, those cheap second hand options aren't actually available to them because you need the cash upfront. Going to somewhere like Brighthouse is actually one of the only options that makes it possible to get a new fridge/washing machine sofa when the old one is broken. They aren't people who have access to the cheapest credit or good rates on loans, because they are on benefits or on low and unstable wages and also because they are quite likely to have several payday loans and high interest credit agreements from Brighthouse etc already in the credit file. They think they can manage £8 a week, but then when the next £8 a week comes along, and the next, it gets too much, sooner or later there's not enough left to put any money on the electricity meter or the kids need new school shoes again or someone who had stopped smoking starts again due to the stress or Christmas is creeping closer and nobody wants to see their children do without any presents and that's when they turn to the likes of Wonga.

The biggest barrier to effective moneysaving is not having enough money in the first place. There's a reason poverty is described as a trap.

I think you're right but for me that doesn't explain the misplaced pride that it's better to have new stuff and bailiffs at your door than what I mentioned which is effectively free or very very affordable items that are second hand. It's one of the reasons real financial education is so important- not apr's and interest rates so much as budgeting, saving, understanding real values of things.

Red-Squirrel_2

okidoodle wrote: »

I think you're right but for me that doesn't explain the misplaced pride that it's better to have new stuff and bailiffs at your door than what I mentioned which is effectively free or very very affordable items that are second hand. It's one of the reasons real financial education is so important- not apr's and interest rates so much as budgeting, saving, understanding real values of things.

Where can you get free second hand stuff? Where can you get any second hand stuff for the amount of cash that people on benefits and zero hours contracts might realistically have immediately available?

I don't think anybody takes pride in their washing machine, really.