How To Deal With Wonga?

A 35% increase in pre-tax profits from Wonga tells me two things about the short term payday lender. The first, the company is very persuasive and successful at what they do. The second is that the state of the economy is dire. Wonga made £84.5 million in profits during 2012. A staggering amount of money is being borrowed by UK consumers who can’t make their income last until the end of the month.

WongaI read an interesting article claiming we should praise Wonga for their entrepreneurial spirit. In truth, this is an angle I had never considered before. Should we praise a company which lends money at rates of 4,000%APR? Which continually rolls over debt and increases the debt? I would say ‘no’, but I decided to dig deeper and to my surprise Wonga does deserve some credit.

Wonga has managed to use technology to efficiently reduce their costs and maximise their profits. Well done, take a bow. You’ve successfully reduced your operating costs so surely we’ll be seeing the costs passed onto the consumer and we can finally have reasonable lending rates? Disappointingly, that didn’t happen, so my stance remains the same. Payday lenders are opportunistic vultures feasting on the financial carcasses left from the banking crisis.

Debt Help: How To Deal With Wonga?

When people approach a payday lender they are desperate for money. Nothing else matters. Whether the money is to be used in order to put food on the table, or if it’s just for a night on the town, they are eager to get the money quickly into their bank. The issue is that Wonga’s interest rate is excessive and if you can’t afford to repay the money on time they will just roll the debt over. This means the debt grows larger every time, until the debt cannot be repaid easily.

Wonga is quick enough to lend the money. They are even happy to roll the debt over continually. However, when you face financial trouble, how do you deal with Wonga? How can you get Wonga to realise that the financial predicament has gone too far and you can’t repay the money. Furthermore, you’ve got used to borrowing £700 per month to supplement your income, yet this line of credit had dried up.

Where should you turn? Read on.

Debt Advice with Wonga

I’ve been here before with a friend. They borrowed £300 and it eventually turned into £900. This was money they didn’t have available to repay in a one off payment. We approached Wonga and explained that the debt situation meant repayment in full was impossible. To Wonga’s credit they offered to help. After receiving a link we completed a short income and expenditure showing that the disposable income was £150 per month.

Wonga replied saying they would be happy to accept the payment as long as it was spread over 3 months. Supposedly the maximum they can accept is 3 months. I explained this was impossible but Wonga wouldn’t negotiate past 3 months. This doesn’t help, however my friend was able to borrow the other 50% from a family member. This meant interest and charges were frozen.

Once Wonga accept the 3 month plan ensure you make payments on time. Failure to keep to the plan will mean Wonga may start interest and charges again.

Quick Tips for Dealing with Wonga

Step 1: Talk to them! Get in touch via email or telephone and explain your situation. You will have to speak on the telephone at some point. They are trained in customer service and if you can genuinely not afford the repayments they will help.

Step 2: Complete the income and expenditure they send across (take 5 minutes). Don’t overstretch yourself because there’s no point lying and making your situation worse.

Step 3: Keep to your payment plan once it’s been agreed.

N.b. If you can’t afford to pay the debt back over a 3 month period you must seek debt help from a charity like the Citizens Advice or Debt Support Trust.

 

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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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