Credit Where Credit Is Due

Many of you will have read my article about payday loan company, aptly titled I hate payday loan companies. I obviously wasn’t sitting on the fence when it came to payday loans. The companies are charging huge amounts of money to borrow relatively small sums of money. I mean a £25 charge for every £100 borrowed is the standard amount being thrown about. That’s horrendous but is it necessarily the fault of the payday loan company?

Let’s be fair, many people are unable to obtain the credit they require because of the decline in availability. Credit cards and loans were once readily available to most people, however these deals have vanished since the credit crisis.

I’m still not a believer in payday loans or the companies that offer this type of lending. Stereo typically these companies are vultures feasting on the poor and ignorant. On the other hand, I have recently experienced some fantastic customer service from a payday loan company

Wonga: Credit Where Credit is Due

I stand by the fact payday loan companies would sell their grand-mother for a £100 and that they have forged an affiliate relationship with the devil. This is based on the years of experience in helping people in debt & being in debt myself. I know the tactics payday lenders use, the fact they take money out a family members bank when they don’t get paid on time by their customer and the horrific debt collection tactics used.

However, I’ve got to be fair and impartial. Debt Advice Resource is all about truth and honesty. Wonga, one of the UK’s largest payday loan companies deserves a pat (a small one) on the back.

I was helping a friend who had a Wonga debt of £900. She was panicked and frightened because she couldn’t repay the loan and they wouldn’t give her another one. I explained that she had come to the end of the road and she had to take action to solve the debt. This is a step by step account of what she did:

Step 1: Telephone Wonga – She gave Wonga a call to explain she could not afford to repay the money. Wonga understood that she had got herself into a financial problem and said they may be able to help. There were no promises but an honest offer of help.

Step 2: Questionnaire – Wonga sent a questionnaire link. The link could be activated 3 days after the payment was late. The questionnaire asked questions about the income and expenditure of the client.  After completing the form and offer 3 monthly payments of £300 Wonga accepted the offer. This meant spreading the payments evenly across 3 months, repaying all of the debt and the interest and charges were all frozen as long at the payment plan was completed.

Step 3: Final Payment – The final payment was just made to Wonga last week and my friend is now debt free again. She made her payments over the phone and each time they were friendly and kind.

It’s unusual to see a payday lender actually working with a client instead of against them to resolve a financial problem. Payday loans should be managed and monitored carefully as they can cause serious financial problems. One payday lender once told me that failure to repay debt would mean jail and that my family could go to jail! Yes, even my 10 year old son would go into care!! I was told that a bailiff could take my sofa, fridge and washing machine to pay for the debt and that I could lose my job.

These are all lies. So, it’s not surprising people are skeptical about payday loan companies.

Step In The Right Direction

More can be done by Wonga and I’m sure they’ll get better with negotiating with customers. At the moment Wonga want the money back in 3 months or they will reject the proposal. So, if Wonga is owed £900 they will want £300 per month for 3 months until the money is repaid. Most people in debt don’t have £300 per month so they can’t take advantage of the kind offer to repay the debt over a longer period of time.

The repayment schedule by Wonga is far from full proof but they are making giant steps to act like other creditors and fairly look after their customers.

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John The Bankruptcy Guy

As an ex-bankrupt, John has experienced the highs and lows of credit. It's with this knowledge that he writes Debt Advice Resource - to help others avoid, or navigate out of, the pitfalls of debt.

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