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[News] Wonga - on verge of collapse.
- Thread starter larus
- Start date
father_and_son
Well-known member
It's not so much that, as "who needs £300 that they don't have now who then believes that 3 months later they will magically have a *spare* £430."
Yep....sounds like they are on the brink.
https://news.sky.com/story/wonga-stops-taking-new-loans-amid-collapse-fears-11485373
Obviously there won't be many people crying over this news, but I suspect all it will mean is another similar firm springs up with a slightly tweaked business model.
There must be a mechanism that the state can feasibly implement to help the people most in need. It seems to me to be a failure of the capitalist system that those most in need end up paying the most for their loans.
There must be a mechanism that the state can feasibly implement to help the people most in need. It seems to me to be a failure of the capitalist system that those most in need end up paying the most for their loans.
I know this has been discussed and although there were some shoddy practices when it was a largely unregulated market, there is a market for this kind of thing. What do people think that the Wonga clientele will do now when they need a pay day loan?
beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 35,303
you mean the welfare state? Wonga isnt giving out loans to people without some form of income or liklihood of repayment. they are targeting the have-it-now consumerist culture, those people who dont want to wait until the end of the month to buy something or, if the ads are to be believed, need an urgent cash for fixing cars and household utilities (and dont have a credit card to defer payment...
). its not capitalism, but consumerism to blame here.you mean the welfare state? Wonga isnt giving out loans to people without some form of income or liklihood of repayment. they are targeting the have-it-now consumerist culture, those people who dont want to wait until the end of the month to buy something or, if the ads are to be believed, need an urgent cash for fixing cars and household utilities (and dont have a credit card to defer payment...
No, that's what they say they are targetting. I think you have to be incredibly naive to assume they're not taking money from the vulnerable at the same time.
beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 35,303
probably, there will always be edge cases, however if they are doing a basic credit check and determining the loanee can repay then they cant be as vulnerable as portrayed. its not a good business model to loan people money if they have no hope to pay it back.
The way Wonga operate I wouldn’t have thought they would have been treated that well. They’ll be alright.
It was the same if you had a key for your electric meter that you charged with a tenner. You payed more.
I suspect that's why they've gone out of business. Well that and the fact that the regulators clamped down on them charging 4000% APR (!!!!!) and later ordered them to pay millions in compensation.
father_and_son
Well-known member
On the contrary.... the BEST customers will be those who can afford the interest payments but can never afford to actually clear the original debt (or can only clear by taking out another loan!).
In terms of return of capital, people who pay on time aren't nearly as profitable as those who will struggle. If I were a CJTC then my credit checks wouldn't be to see if my customer can afford the loan, but to see if they CAN'T... but without forcing them into a full on default. I would then have a wonderful business model that could make me one of the fastest growing financial services businesses in the country and I could reap the rewards of massive dividend payments.
BHAFC_Pandapops
Citation Needed
- Feb 16, 2011
- 2,844
Good. The fact that they even advertise at all means they know they can take advantage of certain people and exploit them. Should be outlawed.
beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 35,303
see your points, though ideally you really do want them to pay back, rather than perpetually roll over the debt and eventually go bankrupt and the debt is written off. i dont remember if it was always the case, but the payday loans are fixed payment, i.e. you pay back a set amount, a capped interest period, then no further charges. unlike the credit card model where you can be forever rolling over or increasing the debt as long as you keep up the minimum. arguably a worse model for the consumerist who must have it all.
Yoda
English & European
Confirmed
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father_and_son
Well-known member
Under the new regulations there is a maximum interest, but when they first started it could just roll on and on.