wonga.com - 2689% APR loans
- Thread starter sellickbhoy
- Start date
Not in the least.
If I need £400 to pay my mortgage to avoid being turfed out onto the streets knowing full well I'm due a cheque for £1k in two weeks, it's a no-brainer.
They are *very* transparent and for that they should be commended.
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Fair comment, and it's not like they come round your house and force you to borrow the money.
Fore warned is for armed.
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C
crossdaz
Exactly right. The actual interest paid is a very small amount and the apr is misleading.
Obviously the danger is that people don't do this as a one off and do it week in and week out - then it does get expensive!!
Of course the reason why these businesses exist is that the holier than thou High Street banks will not make small cash loans at any price because they would have to be equally transparent and couldn't possibly compete.
Those fancy buildings and advertising campaigns don't drop out of the sky
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I haven't got the calculations at the moment but bank overdraft charges can be higher than that APR - it's a useless method of calculating short term interest rates (except, perhaps to compare with other similar services).
It used to be the case that the payday loan companies had to consider the fees of a CHAPS transfer as well, but I think it's all faster payments now.
It used to be the case that the payday loan companies had to consider the fees of a CHAPS transfer as well, but I think it's all faster payments now.
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It might sound reasonable for the short period of time that you initially borrow the money for. But what happens if for some reason you cannot pay the loan back after that period? The amount borrowed is soon going to mount up. The sad fact is that the people who are likely to use such a service are also the same people who are going to find themselves in this position.
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D
doherty_1980
But they are short term loans only like a pay day loan so the apr is completely irrelevant. The Wonga site seems to be down for maintenance but I just found another company charging 3198% APR. For a £200 loan for 9 days I would pay back a total of £223.40. Its a very cheap and quick way to borrow money if you ask me, I wouldnt lend money out for those low rates. In fact I wouldnt waste time chasing a measly £23 gross profit on anything that had a £200 outlay, let alone something as high risk as lending.
Its not their fault if the people can't pay the loan back. Its time everyone started taking responsibility for their own actions.
Its not their fault if the people can't pay the loan back. Its time everyone started taking responsibility for their own actions.
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S
solopreneur
It is not loan shark territory at all. Compare the total amount repayable, and it is quite fair for lending a few quid for a very short space of time.
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solopreneur
I would like to state that I have no affiliation etc with any of these companies, I just think that you have misunderstood APR, or have not taken its limitations into account.
If a mate asks you to borrow a tenner until this time next week, and you say "no probs, just buy me a pint when you repay me", calculate the APR that you have just charged him- I bet that it is far greater than these payday loans companies.
If I could find the calculation, I would work it out...
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Me neither - it just p*sses me off when people grab hold of a small piece off information and mmake big judgements.
A little knowledge, as they say, is a dangerous thing...
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The APR looks mad but in reality you are paying it on a small amount over a max of 30 days so its very like the banks charging you £20 every 5 days for using an overdraft
Go back a few years when if you went overdrawn, by even 1p for 1 day, they charged you for every dd/standing order/cheque/cash withdrawal **over the previous three months**.
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According to http://www.prudentminds.com/apr-calculator.html
£10 borrowed and £13 repaid (the tenner plus a pint) as one repayment = 2229.8%
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Its already been mentioned but it is because the loans are done over a short period of time. what should also be pointed out it that they work out less than if you did an overdraft.
Payday loans have there place and all they are is a convenient way to borrow cash quickly.
At least it puts Loan Sharks out of business.
Payday loans have there place and all they are is a convenient way to borrow cash quickly.
At least it puts Loan Sharks out of business.
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Skimmed some of the replies so it's probably been said. Wonga is pretty upfront about everything and it's based around really small loans from what I can gather - max loan is £1k. Their site's title is "Short-term loans".
I think they are perfectly fair with the APR though I think there has to be something which keeps control if somebody who borrowed something like £100 forgets - they might face a nasty surprise a few weeks later.
I think they are perfectly fair with the APR though I think there has to be something which keeps control if somebody who borrowed something like £100 forgets - they might face a nasty surprise a few weeks later.
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M
MH1
Quite correct, unfortunately a load of applicants are behind with rent etc and therefore cannot apply.
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suprjparks
Many people are quick to say how bad these companies are. I guess the interest is justified (usually) for the borrowing period. They tend to spell out the damage to you as well so you know exactly how much you are paying back. I've used one before called payday power, ended up paying around £25 extra on what I borrowed, which didn't seem too bad. I bet you get a few dodgy companies out there though.
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Interesting article here that compares some of them to bank charges for going the equivalent amount over an overdraft: http://uk.finance.yahoo.com/news/The-high-street-bank-charging-yahoofinanceuk-179384107.html
John
John
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