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Wonga
Chizz
Posts: 28,334
Just listening to the story of a student - a teenager, who has since taken a part-time job - who has borrowed £400 from Wonga, has paid back £1,300 and still owes £1,500.
I cannot see any reason why these "pay-day loan" companies should be allowed to stay in business without a massive change in the law preventing them from charging more than about 20% APR. At the very least, they should be prevented from making a profit from customers who fail to pay - that way they will only lend to people who can afford it.
I cannot see any reason why these "pay-day loan" companies should be allowed to stay in business without a massive change in the law preventing them from charging more than about 20% APR. At the very least, they should be prevented from making a profit from customers who fail to pay - that way they will only lend to people who can afford it.
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Morally I am in complete agreement with you.
Cynical exploitation of the financially vulnerable leaves a very nasty taste.
Commercially there is an argument that borrowers or would be borrowers should read the terms and conditions.2 -
The poor will always pay more than they can afford and the most.
I hate these companies with a passion but money is the name of the game in this world.0 -
If they didnt have a job in the first place I doubt they were entirely honest in their application?
If they lied to get money they couldnt afford to pay back then tough shit really.0 -
He didn't have a job; he told them; yet they still agreed to loan him the money. This kind of money-grubbing exploitation shouldn't be acceptable.cafcdave123 said:If they didnt have a job in the first place I doubt they were entirely honest in their application?
If they lied to get money they couldnt afford to pay back then tough shit really.
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In that case then it's ridiculous that they were allowed to lend to him!Chizz said:
He didn't have a job; he told them; yet they still agreed to loan him the money. This kind of money-grubbing exploitation shouldn't be acceptable.cafcdave123 said:If they didnt have a job in the first place I doubt they were entirely honest in their application?
If they lied to get money they couldnt afford to pay back then tough shit really.0 -
And that is why Wonga are having to wipe off hundreds of millions of so called monies owed:cafcdave123 said:
In that case then it's ridiculous that they were allowed to lend to him!Chizz said:
He didn't have a job; he told them; yet they still agreed to loan him the money. This kind of money-grubbing exploitation shouldn't be acceptable.cafcdave123 said:If they didnt have a job in the first place I doubt they were entirely honest in their application?
If they lied to get money they couldnt afford to pay back then tough shit really.
bbc.co.uk/news/business-29457044
No fact finds. They prey on those with bad credit history and who will also more than likely fail any affordability test.1 -
Wonga have in fact just written off hundreds of thousands of loans they made to people that they did not adequately check for ability to repay. I do get annoyed though with attitudes like this. Sure, Wonga should not have lent someone in that situation money but equally someone in that situation should not have applied for a bloody loan they couldn't repay. They are just as much, if not more, to blame as Wonga.Chizz said:
He didn't have a job; he told them; yet they still agreed to loan him the money. This kind of money-grubbing exploitation shouldn't be acceptable.cafcdave123 said:If they didnt have a job in the first place I doubt they were entirely honest in their application?
If they lied to get money they couldnt afford to pay back then tough shit really.
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But some people are desperate as the only option can be debt collectors. Others just need protection from themselves which is why there are affordability tests.Rizzo said:
Wonga have in fact just written off hundreds of thousands of loans they made to people that they did not adequately check for ability to repay. I do get annoyed though with attitudes like this. Sure, Wonga should not have lent someone in that situation money but equally someone in that situation should not have applied for a bloody loan they couldn't repay. They are just as much, if not more, to blame as Wonga.Chizz said:
He didn't have a job; he told them; yet they still agreed to loan him the money. This kind of money-grubbing exploitation shouldn't be acceptable.cafcdave123 said:If they didnt have a job in the first place I doubt they were entirely honest in their application?
If they lied to get money they couldnt afford to pay back then tough shit really.
It's easy to say for some to say "I can afford three quid a day, it's only a pint after all" but the reality is that that pint still gets bought. And consequently the hundred pound a month repayment is anything but affordable.
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I think it's simple to sort out, however, with a law that just states it's unlawful for a company to make profit out of a loanee who fails to make payments. In one fell swoop, it would prevent these despicable companies from lending to people unless they are totally sure that their repayments are going to be made, on-time and in full.Addick Addict said:
But some people are desperate as the only option can be debt collectors. Others just need protection from themselves which is why there are affordability tests.Rizzo said:
Wonga have in fact just written off hundreds of thousands of loans they made to people that they did not adequately check for ability to repay. I do get annoyed though with attitudes like this. Sure, Wonga should not have lent someone in that situation money but equally someone in that situation should not have applied for a bloody loan they couldn't repay. They are just as much, if not more, to blame as Wonga.Chizz said:
He didn't have a job; he told them; yet they still agreed to loan him the money. This kind of money-grubbing exploitation shouldn't be acceptable.cafcdave123 said:If they didnt have a job in the first place I doubt they were entirely honest in their application?
If they lied to get money they couldnt afford to pay back then tough shit really.
It's easy to say for some to say "I can afford three quid a day, it's only a pint after all" but the reality is that that pint still gets bought. And consequently the hundred pound a month repayment is anything but affordable.1 -
No doubt a lot of these people will have kids and will do anything to feed them, so I can understand why people take them out and can't pay back. Desperate times lead to desperate measures.Rizzo said:
Wonga have in fact just written off hundreds of thousands of loans they made to people that they did not adequately check for ability to repay. I do get annoyed though with attitudes like this. Sure, Wonga should not have lent someone in that situation money but equally someone in that situation should not have applied for a bloody loan they couldn't repay. They are just as much, if not more, to blame as Wonga.Chizz said:
He didn't have a job; he told them; yet they still agreed to loan him the money. This kind of money-grubbing exploitation shouldn't be acceptable.cafcdave123 said:If they didnt have a job in the first place I doubt they were entirely honest in their application?
If they lied to get money they couldnt afford to pay back then tough shit really.3 - Sponsored links:
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a lot of the time is to pay for a new 50 inch plasma.
Or they can't be bothered saving.
Stop with the victim mentality.0 -
And the loan sharks rejoiced...Chizz said:
I think it's simple to sort out, however, with a law that just states it's unlawful for a company to make profit out of a loanee who fails to make payments. In one fell swoop, it would prevent these despicable companies from lending to people unless they are totally sure that their repayments are going to be made, on-time and in full.Addick Addict said:
But some people are desperate as the only option can be debt collectors. Others just need protection from themselves which is why there are affordability tests.Rizzo said:
Wonga have in fact just written off hundreds of thousands of loans they made to people that they did not adequately check for ability to repay. I do get annoyed though with attitudes like this. Sure, Wonga should not have lent someone in that situation money but equally someone in that situation should not have applied for a bloody loan they couldn't repay. They are just as much, if not more, to blame as Wonga.Chizz said:
He didn't have a job; he told them; yet they still agreed to loan him the money. This kind of money-grubbing exploitation shouldn't be acceptable.cafcdave123 said:If they didnt have a job in the first place I doubt they were entirely honest in their application?
If they lied to get money they couldnt afford to pay back then tough shit really.
It's easy to say for some to say "I can afford three quid a day, it's only a pint after all" but the reality is that that pint still gets bought. And consequently the hundred pound a month repayment is anything but affordable.
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People who borrow from Wonga are mainly low paid, indebted and are borrowing for day to day living, (or support Newcastle or Blackpool!). It's easy to say they should know better but hand to mouth living hardly allows time and space for sound budgeting or financial planning.
Wonga is 100% the culprit, it has a business model that was generating 30% return on capital, about the highest return any business could dream of. That return was not based on new technology or innovation, it was based on turning over every £1 of cash as many times as possible by making as many loans as possible. If every loan was repaid on time they apparently only made £15 profit on every loan, that would require them to make 4m loans a year to generate the profits they have made, but in fact that made a quarter of that number in loans. It must always have been realised that rolling over loans at 5,000% interest rate was the key to supercharging Wonga profits.
They rejected a fair proportion of loan applications which was presented to the outside as proof that were doing proper checks. I'm sure they would have had many fraudulent attempts to get money which got picked up in identity documents and accounted for many rejections, because given they approved loans in 15 minutes, how could they conduct proper checks on ability to pay.
Wonga showed its true colours when it sent out fake letters aimed at scaring people into paying up unpaid loans. Going through the proper legal process to obtain an affordable judgement from the courts for someone with little or no income is the last thing lenders want.
Wonga and others have simply set out to exploit a vulnerable section of society where demand for short term loans is almost infinite where they can name their own price, and they have.
The problem is that cash is a valuable commodity and anyone with cash would be better off putting it in any other business apart from using it in a business to lend small sums to people living on the breadline at a price they could afford. The Church has assets of over £5bn invested in the stock market and land, why can't they sacrifice some returns and do some good with it, could be the answer to boosting congregations!6 -
While the FSA, as was, now the FCA has, quite rightly been in receipt of a lot of flack, it's clear it is going to make a much better job of regulating this industry than the Office of Fair Trading ever did. It is no surprise that the OFT is now defunct and quite rightly so. It was a hopeless organisation with hopeless staff hamstrung by hopeless legislation.
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So someone who borrows money they know they can never repay, in full knowledge of the interest rates and penalties, is entirely blameless? Utter bullshit!Dippenhall said:Wonga is 100% the culprit
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I have bolded the pertinent parts.Chizz said:
I cannot see any reason why these "pay-day loan" companies should be allowed to stay in business without a massive change in the law preventing them from charging more than about 20% APR. At the very least, they should be prevented from making a profit from customers who fail to pay - that way they will only lend to people who can afford it.
They are designed to be used for short term use, therefore using the APR as an example of how expensive they are isn't always that clear. I don't have a problem with payday companies operating, I'm sure a lot of people find them useful. However, there does need to be tighter regulation. They should not be allowed to exploit and in some cases intimidate customers who struggle to pay.
However, the people that use them also have to take some responsibility. It can't all just be blamed on someone else. Personally if I'm entering into any contract, be it financial or otherwise I'll make sure I read as thoroughly as possible so I know the details. If I don't agree with the terms, you know what, I won't sign it. The charges are made quite clear to people from the outset. I think there needs to be some shared responsibility here.0 -
Is this a fact supported by evidence or is this conjecture ? Pay day loans are scummy most owned ultimately by hedge funds. Church of England spoke out agaisnt them but hey ho a week later it is revealed that COE had shares in one of them. Rich get richer whilst the poor..............MrOneLung said:a lot of the time is to pay for a new 50 inch plasma.
Or they can't be bothered saving.
Stop with the victim mentality.0 -
APR is just a means of comparing one interest rate with another. So, for instance an APR of 20% is much cheaper than the APR that Wonga advertise on the home page of their website, which is an eye-watering 5,853%. It would be entirely possible to draft a law which uses any other type of interest rate, but APR is a typical measure.colthe3rd said:
I have bolded the pertinent parts.Chizz said:
I cannot see any reason why these "pay-day loan" companies should be allowed to stay in business without a massive change in the law preventing them from charging more than about 20% APR. At the very least, they should be prevented from making a profit from customers who fail to pay - that way they will only lend to people who can afford it.
They are designed to be used for short term use, therefore using the APR as an example of how expensive they are isn't always that clear. I don't have a problem with payday companies operating, I'm sure a lot of people find them useful. However, there does need to be tighter regulation. They should not be allowed to exploit and in some cases intimidate customers who struggle to pay.
However, the people that use them also have to take some responsibility. It can't all just be blamed on someone else. Personally if I'm entering into any contract, be it financial or otherwise I'll make sure I read as thoroughly as possible so I know the details. If I don't agree with the terms, you know what, I won't sign it. The charges are made quite clear to people from the outset. I think there needs to be some shared responsibility here.
I don't have a problem with "payday" loan companies. I do have a problem with them charging the sky-high fees that they do. It should not be legal for a company to extort money in this way. Its usury.
Canada and Japan have both found ways to legislate against it. In Canada, it's not legal to charge more than 60% per annum; in Japan, the figure is much lower still. We should do something similar.
The knee-jerk reaction is "that'll just lead people to go to loan sharks instead". Well, "loan shark" might be a pretty good description of some of these companies anyway. And a law would make it illegal in all cases, not just the "reputable" firms.
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I'm fairly sure that a loan shark won't actually care if there's a law against it. Nor will the lads he sends round to break your legs when you don't pay.Chizz said:The knee-jerk reaction is "that'll just lead people to go to loan sharks instead". Well, "loan shark" might be a pretty good description of some of these companies anyway. And a law would make it illegal in all cases, not just the "reputable" firms.
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So, we shouldn't bother with a law, simply because some people might break it?Rizzo said:
I'm fairly sure that a loan shark won't actually care if there's a law against it. Nor will the lads he sends round to break your legs when you don't pay.Chizz said:The knee-jerk reaction is "that'll just lead people to go to loan sharks instead". Well, "loan shark" might be a pretty good description of some of these companies anyway. And a law would make it illegal in all cases, not just the "reputable" firms.
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No, I'm saying that dismissing the 'knee-jerk' reaction with that argument is pretty silly.Chizz said:
So, we shouldn't bother with a law, simply because some people might break it?Rizzo said:
I'm fairly sure that a loan shark won't actually care if there's a law against it. Nor will the lads he sends round to break your legs when you don't pay.Chizz said:The knee-jerk reaction is "that'll just lead people to go to loan sharks instead". Well, "loan shark" might be a pretty good description of some of these companies anyway. And a law would make it illegal in all cases, not just the "reputable" firms.
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So we should pass a law like that then?Rizzo said:
No, I'm saying that dismissing the 'knee-jerk' reaction with that argument is pretty silly.Chizz said:
So, we shouldn't bother with a law, simply because some people might break it?Rizzo said:
I'm fairly sure that a loan shark won't actually care if there's a law against it. Nor will the lads he sends round to break your legs when you don't pay.Chizz said:The knee-jerk reaction is "that'll just lead people to go to loan sharks instead". Well, "loan shark" might be a pretty good description of some of these companies anyway. And a law would make it illegal in all cases, not just the "reputable" firms.
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But it's only "eye watering" because a short term loan's interest is being quoted as an annual loan. Now, say I wanted to borrow £100 for some emergency I had and I don't get paid for 2 weeks. That would be £120 I paid back. £20 doesn't seem too unreasonable really. But quote it as you can borrow £100 with an APR of 5000%. Which sounds worse?Chizz said:
APR is just a means of comparing one interest rate with another. So, for instance an APR of 20% is much cheaper than the APR that Wonga advertise on the home page of their website, which is an eye-watering 5,853%. It would be entirely possible to draft a law which uses any other type of interest rate, but APR is a typical measure.colthe3rd said:
I have bolded the pertinent parts.Chizz said:
I cannot see any reason why these "pay-day loan" companies should be allowed to stay in business without a massive change in the law preventing them from charging more than about 20% APR. At the very least, they should be prevented from making a profit from customers who fail to pay - that way they will only lend to people who can afford it.
They are designed to be used for short term use, therefore using the APR as an example of how expensive they are isn't always that clear. I don't have a problem with payday companies operating, I'm sure a lot of people find them useful. However, there does need to be tighter regulation. They should not be allowed to exploit and in some cases intimidate customers who struggle to pay.
However, the people that use them also have to take some responsibility. It can't all just be blamed on someone else. Personally if I'm entering into any contract, be it financial or otherwise I'll make sure I read as thoroughly as possible so I know the details. If I don't agree with the terms, you know what, I won't sign it. The charges are made quite clear to people from the outset. I think there needs to be some shared responsibility here.
I don't have a problem with "payday" loan companies. I do have a problem with them charging the sky-high fees that they do. It should not be legal for a company to extort money in this way. Its usury.1 -
Not necessarily. If you restrict the interest rate that a company can charge to a point where that company will not be profitable then the company will go away. And then the people who are in need of the money will go elsewhere. Hence the 'knee-jerk' argument that legislation will simply move business away from regulated firms (however distasteful you may find them) into an unregulated and far more dangerous economy where the response to a failure to pay will not be a letter from a (fake) law firm.Chizz said:
So we should pass a law like that then?Rizzo said:
No, I'm saying that dismissing the 'knee-jerk' reaction with that argument is pretty silly.Chizz said:
So, we shouldn't bother with a law, simply because some people might break it?Rizzo said:
I'm fairly sure that a loan shark won't actually care if there's a law against it. Nor will the lads he sends round to break your legs when you don't pay.Chizz said:The knee-jerk reaction is "that'll just lead people to go to loan sharks instead". Well, "loan shark" might be a pretty good description of some of these companies anyway. And a law would make it illegal in all cases, not just the "reputable" firms.
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Kneecap Finance.0
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Then it's simply finding a rate at which the lender can make a healthy profit when lending responsibly, ie to those people who are in a position to repay. And banning lenders from profiteering when users fail to pay.Rizzo said:
Not necessarily. If you restrict the interest rate that a company can charge to a point where that company will not be profitable then the company will go away. And then the people who are in need of the money will go elsewhere. Hence the 'knee-jerk' argument that legislation will simply move business away from regulated firms (however distasteful you may find them) into an unregulated and far more dangerous economy where the response to a failure to pay will not be a letter from a (fake) law firm.Chizz said:
So we should pass a law like that then?Rizzo said:
No, I'm saying that dismissing the 'knee-jerk' reaction with that argument is pretty silly.Chizz said:
So, we shouldn't bother with a law, simply because some people might break it?Rizzo said:
I'm fairly sure that a loan shark won't actually care if there's a law against it. Nor will the lads he sends round to break your legs when you don't pay.Chizz said:The knee-jerk reaction is "that'll just lead people to go to loan sharks instead". Well, "loan shark" might be a pretty good description of some of these companies anyway. And a law would make it illegal in all cases, not just the "reputable" firms.
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and next we can let off crack head muggers who cant afford their next hit.0
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But who decides if the people can't pay versus those people who just choose not to pay?
I think better regulation will help - but it's never going to please everyone.
The person taking out the loan does need to accept a certain amount of responsibility.
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buyer beware is what I say.
there are terms & conditions that show the APR - if you don't like it then don't borrow the money.
no good carping about it after the event - no one twisted their arm to fill out the application form did they.
and before anyone says that the borrowers are on the breadline & need the money to survive then I suggest you visit their homes & see the latest flat screen TV's they have & the X-boxes, Wii's etc that are in the kids bedrooms & then go to the slums of India, Rio etc to see what REAL poverty is !!!3 -
It's still in consultation but there is indeed likely to be a "cap" -100%. This came out just three months after the FCA took on responsibility for the area, which by regulation standards is warp speed.Chizz said:
APR is just a means of comparing one interest rate with another. So, for instance an APR of 20% is much cheaper than the APR that Wonga advertise on the home page of their website, which is an eye-watering 5,853%. It would be entirely possible to draft a law which uses any other type of interest rate, but APR is a typical measure.colthe3rd said:
I have bolded the pertinent parts.Chizz said:
I cannot see any reason why these "pay-day loan" companies should be allowed to stay in business without a massive change in the law preventing them from charging more than about 20% APR. At the very least, they should be prevented from making a profit from customers who fail to pay - that way they will only lend to people who can afford it.
They are designed to be used for short term use, therefore using the APR as an example of how expensive they are isn't always that clear. I don't have a problem with payday companies operating, I'm sure a lot of people find them useful. However, there does need to be tighter regulation. They should not be allowed to exploit and in some cases intimidate customers who struggle to pay.
However, the people that use them also have to take some responsibility. It can't all just be blamed on someone else. Personally if I'm entering into any contract, be it financial or otherwise I'll make sure I read as thoroughly as possible so I know the details. If I don't agree with the terms, you know what, I won't sign it. The charges are made quite clear to people from the outset. I think there needs to be some shared responsibility here.
I don't have a problem with "payday" loan companies. I do have a problem with them charging the sky-high fees that they do. It should not be legal for a company to extort money in this way. Its usury.
Canada and Japan have both found ways to legislate against it. In Canada, it's not legal to charge more than 60% per annum; in Japan, the figure is much lower still. We should do something similar.
The knee-jerk reaction is "that'll just lead people to go to loan sharks instead". Well, "loan shark" might be a pretty good description of some of these companies anyway. And a law would make it illegal in all cases, not just the "reputable" firms.
Of interest is that the cap covers not just the headline interest rate but also any add-on admin fees and the like. fca.org.uk/news/cp14-10-proposals-for-a-price-cap-on-high-cost-short-term-credit
The full document, for those so inclined is here: fca.org.uk/your-fca/documents/consultation-papers/cp14-101
