WONGA AND LOAN SHARKS
PUBLISHED IN MY COLUMN ON SUNDAY 29TH JUNE IN SCOTTISH SUN ON SUNDAY
Payday loan company Wonga were in the news yet again for all the wrong reasons. Some accused them of being loan sharks, but that really is such an unfair comparison. After all it’s not like they charge extortionate interest rates, Wonga only charges 5853% interest (APR).
Their welcoming website advises that loans are only for short term. Clearly they wouldn’t want you getting a nasty shock that if you took out a £100 loan and didn’t pay it back with compound interest in a year you could end up owing approximately £5800, but after two years you would owe them approximately £342,000, and as a company they really wouldn’t want that happening to you.
They also don’t threaten violence with baseball bats, although they did get a hard time for sending out bogus lawyers letters claiming to be from companies “Barker & Lowe” and “Chainey, D’Amato & Shannon”. These letters were in fact from Wonga. The threat was of adverse consequences if the debts were not repaid quickly. ‘Charges were added to some customer accounts as a result of this practice.’
They have since apologised sincerely and it turns out it’s only really illegal if you call yourself a solicitor not a lawyer!
WONGA AND LOAN SHARKS- SURELY NOT THE SAME?
Despite the bad press, the poor souls of Wonga are totally misunderstood as their real aim is to help if you’re short of cash or in need of emergency help. Unlike loan sharks, Wonga are a legitimate thriving business which has seen their profits quadruple in 2 years.
They were doing so well that they needed to move some of their operations to Switzerland, which of course has absolutely nothing to do with dodging tax- it is just a coincidence that foreign companies in Switzerland need only pay 1% tax on their profits and some of their operations here are now tax deductible. All pure coincidence!
People go to Wonga because those who rely on such loans can’t get them elsewhere. Surely Wonga is just a victim of its own success, with the desperate need for instant access to cash within five minutes?
Why should Wonga be worried if people can’t keep up with payments? The fact that millions of people are drowning in payday loans isn’t of their making. Especially when you consider that they try so hard to warn us with the small print ‘late repayments can cause you serious money problems’.
WONGA AND LOAN SHARKS-BLOOD SUCKING LEECHES?
Many will talk of corporate responsibility and criminality, yet Wonga’s hearts are surely in the right place, having offered to pay £2.6million in compensation to 44,556 customers sent bogus lawyer letters.
Debts may well spiral from hundreds to thousands of pounds, people may not able to afford food, but surely Wonga can’t be compared to the blood sucking leeches that loan sharks are who prey on the poor, desperate and vulnerable?