[News] Wonga - on verge of collapse.

[golddene]

Just been reported on the TS news that they are no longer processing new loans?

 

[father_and_son]

Who the feck borrows £300 and then pays back £430, just three months later?

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."

 

[dazzer6666]

Just been reported on the TS news that they are no longer processing new loans?

Yep....sounds like they are on the brink.

https://news.sky.com/story/wonga-stops-taking-new-loans-amid-collapse-fears-11485373

 

[Simster]

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.

 

[Springal]

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]

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.

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.

 

[Simster]

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.

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]

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.

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.

 

[Questions]

Wonga and their ilk have a despicable business model that should, imo, be illegal.

That said, I’m always bemused by the glee that accompanies any legal company going bust. Wonga employ several hundred people - they’ll be out of work. Let’s all celebrate. Odd.

The way Wonga operate I wouldn’t have thought they would have been treated that well. They’ll be alright.

 

[Questions]

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.

It was the same if you had a key for your electric meter that you charged with a tenner. You payed more.

 

[Simster]

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.

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]

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.

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]

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]

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.

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]

Confirmed

Sent from my SM-G960F using Tapatalk

 

[father_and_son]

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.

Under the new regulations there is a maximum interest, but when they first started it could just roll on and on.