Short term lenders, like Wonga, make their money through misery, greed and unfair credit lending. It’s an opinion from one side of the debate and it’s also my opinion. The alternative side of the coin has been displayed today. Global finance giant Wonga has issued a 12 case portfolio of happy customers via a film it’s made.
It’s no surprise I hate payday loan companies, but for the company to release obvious propaganda about their “happy” customers is a farce. This takes place as MPs begin to investigate the payday lending industry.
Wonga’s Sob Story
Poor, disheartened short term lender, Wonga, is unhappy that they’re being portrayed as nasty vicious loan sharks. Wonga claims that not everybody is vulnerable and shouldn’t be treated as such. People have the right to make their own decisions and should have the freedom to make their own financial mistakes, yet Wonga – among other payday lenders – exploit this.
Only last year, Wonga was encouraging students to take out a loan in order to go on holiday. Students, most of whom don’t have jobs so can’t repay the loan!!
In a Channel 4 interview, Wonga bosses admitted they looked at 8,000 pieces of data to determine whether somebody should get a loan. Great! Yet, one of those pieces of data isn’t a wage slip. To acquire a Wonga loan, a person can simply say they are in employment even if they are not. This creates a debt spiral where a person borrows £300 and they can’t repay it because they are unemployed. The debt rises gradually and before they know it the debt is £2,000.
The Trust About Wonga
Wonga is playing within the rules currently laid out by the Financial Conduct Authority, which is under review by Parliament. I’ve long advocated the U.S. style of short term lending where some states protect the consumer with maximum role over period, interest rates and borrowing amounts.
Payday lenders have the ability to regulate their industry and put these practices in place but choose not to. Some consumers use the service the way it is mean to be used – for short term support. However, there are many who do not.
Wonga has over 1 million customers. The film director have picked 12 customers. These 12 customers have reflected their views of Wonga to portray the service as exceptional. These customers all repaid their loans on time and got the desired short term finance they required.
For many consumers the support they require is not money, but a socially responsible lender who can say “no”. Wonga and other payday lenders should check the information being given is accurate and that the loan should be repaid. Wonga’s quote from today is that “Banks don’t offer the kind of deals we do”. They are right, because banks expect certain standards to be met. We criticised the banks for their loose lending and we accept short term lenders are even slacker in their checks.
When You Can’t Repay?
So, when the day comes to repay the loan and it’s not possible, what happens? Well, if you contact Wonga they will generally allow you to “roll over” the loan. This increase the capital being borrowed and the amount to be repaid. Put simply, they are getting a person into increasing amounts of debt and not concerning themselves with why a person can’t pay. This suits the consumer because they are stuck financially and this seems like a good option.
If you don’t call Wonga and explain why the money isn’t there, then they will call you. They call your home, your mobile and even your work. If they have your family members card on file they will use this by way of payment, even though it’s not your money.
Wonga harass people until they break. Other payday lenders do the same to get their money back.
It’s time for politicians to stand up and protect consumers.