Wonga customers - what should they do?
Customers are instructed to repay any existing loans with Wonga. Customers with claims against Wonga should submit their claims and be dealt with as unsecured creditors by Grant Thornton. Read the latest press release from Wonga.
As a leading UK short term loan broker, CashLady provides an alternative to Wonga payday loans. We can help customers apply for loans with other lenders.
Who are Wonga.com?
Founded by Errol Damelin in 2006, Wonga.com is a provider of high cost short-term finance. Damelin teamed up with Jonty Hurwitz in 2007. Using his background as a software engineer, Jonty helped develop the automated loan system and fast money transfer.
Arguably the most well-known of all UK short term loan providers, Wonga.com has certainly had its fair share of media attention. In 2014, Wonga was the largest loan provider in the UK by quite a significant margin - 30-40% of the total market share. In 2018, following a lot of turmoil in the industry, they no longer have the largest market share
Is Wonga a payday loan company?
Strictly defined, a ‘payday loan’ is a loan that bridges the gap between one payday and the next. The terms ‘payday loan’ and ‘short term loan’ are often used interchangeably by the general public. By definition, a ‘payday loan’ is a one month product whilst short term loans could last up to 6 months. But in any case, yes! Wonga is a payday loan company.
With Wonga you could borrow for any number of days ranging up to 34 days which does not have to coincide with the day you receive your salary.
Wonga also offered short term loans over up to 3 months.
Both types of loan were high interest finance options, aimed at short term borrowing, and can be expensive if they’re not repaid in time. They’re also not practical for long-term and repeat borrowing. This means that you should find a different solution if you’re regularly relying on Wonga and other short term loan providers.
Wonga’s short term Flexi Loans have a representative 1,261% APR (as of April 2016), whilst their loan APR stands at 1,509%.
What’s Wonga.com’s attitude to lending?
With the slogans 'straight talking money' and 'credit for the real world', Wonga.com has been promoted as the credit lender that does what it says. You get all the information that you need up-front, to make an educated and informed decision without fears of hidden fees or charges.
Marketing originally featured the Wongies – puppets of two elderly women and one elderly man – but recovering from the bad reputation and showing that they were honest and trustworthy meant a large scale rebranding exercise for Wonga. The credit for the real world rebranding sought to change perceptions of payday loans, to reduce the risk of short term loans targeting a vulnerable audience.
With this new campaign came guarantees of protection for borrowers, including more transparent pricing and a 24-hour money back guarantee that could tackle ‘buyer’s remorse’.
Wonga offers short term loans (a.k.a payday lonas) of up to £400 in the UK, with loan terms up to 34 days. The total amount repayable is made clear during the quote process, so that loan applicants can easily see how much they’ll owe altogether.
In 2015, Wonga announced that late payment fees would not be immediately applied. Borrowers were given three extra days to repay their loan. This was announced as part of the wider rebranding campaign.
Interest on a Wonga payday loan accrues for a maximum of 60 days.
What loan products does Wonga.com offer?
As well as short-term loans with 34 day maximum terms, Wonga offered the Flexi Loan paid back over three monthly instalments.
Wonga loans, according to the provider, are aimed at people on mid-level salaries. These people are usually short of money, have been hit by an unexpected expense or are experiencing short-term cash flow issues.
CashLady Representative 49.9% APR
What else have Wonga been involved in?
You might recognise the Wonga name even if you haven’t previously been looking for a loan.
Wonga sponsored the Newcastle United football team, and has done since October 2012. Previously, Wonga has been involved in sponsorship deals with other teams.
The company has also previously sponsored ITV show Red or Black.
Are Wonga loans better now that regulation is stricter?
There is certainly no denying that Wonga has courted controversy in the past. The Wonga name was the biggest and most recognisable in the scandal, which led to big changes in the industry. In fact, in recent years, Wonga has had to pay compensation of more than £20 million to borrowers. It has written off the debts of roughly 330,000 customers, resulting in a loss of a further (estimated) £220 million.
Following investigations into market, almost 50% of high-cost credit companies stopped lending. Those that remained, including Wonga, had to make big changes to their business models.
In July 2014, new regulations came into place to protect consumers. Credit lenders, including Wonga, now have to carry out more thorough affordability checks.
More detailed checks, before a loan is agreed, have helped to ensure that consumers can’t borrow money that they’ll be unable to repay. There are also restrictions ensuring that interest can’t keep accruing for many months if the loan is paid back late. These new rules, overseen by the Financial Conduct Authority (FCA), include:
- All television advertising must include a risk warning.
- Loans can’t be rolled over more than two times.
- Lenders can attempt to claim what they’re owed from a borrower’s account using a Continuous Payment Authority, but cannot attempt this more than twice if the money isn’t available.
- Loans are capped at a cost of 0.8% per day.
- Default fees are capped at £15.
- Loans have a total cost cap of 100%, meaning that the most you’ll ever pay back is double what you originally borrowed.
Wonga claimed their payday loans come with a lot more protection for the borrower, making them a lot more affordable. As a result of the FCA regulations, Wonga only approved 20% of applicants. This change is positive for borrowers, who won’t be allowed to borrow money that they can’t realistically afford to pay back.
Borrowers could also see all costs and charges up front, before choosing to take out their loan. This means that there are no surprises during the loan term, or once repayments have been made. Beyond the requirements of the Financial Conduct Authority, Wonga offered a 3 day grace period before charging a £15 default fee.
Wonga loans certainly had a bad reputation in the past. Such a reputation was hard to recover from. Wonga loans came under strict rules to ensure that debt wouldn't spiral out of control.
How did the Wonga loan process work?
You can apply for a Wonga loan online. If Wonga is a suitable option, then you can go through the loan application process as long as you have a bank account, debit card and mobile phone, and you’re over 18. You also need to be a UK resident to use Wonga.com’s UK offering.
In keeping with their promise of transparency, Wonga provides up-front information about the cost of a loan. When you choose your loan amount and term, Wonga will display a final figure that shows the interest and the total repayment amount. Wonga has addressed previous concerns about high APR loans by ensuring that borrowers can make a an informed decision.
Wonga loans are advertised with a 1,509% APR and all applications were processed online, with a credit check carried out prior to acceptance or refusal.
Wonga loan decisions were usually immediate, with a positive or negative response. In some circumstances, a Wonga application is held whilst more details were requested. Someone will be in touch if your loan request isn’t immediately accepted or rejected.
If you’re offered a loan then you can sign your loan agreement digitally, simply by ticking a box. This action formalises the loan agreement, causing the money to be sent to your bank account within the next five minutes. Exactly how long that money takes to reach your account will depend on your own bank.
To maximise the number of loans that are repaid on time, Wonga offered automatic repayment. You would register a debit card when you apply for your loan, and on your repayment date the money is taken automatically. If the money can’t be taken on the due date, because of a lack of funds in the account, then Wonga can attempt to take the payment again.
There were no early repayment fees associated with Wonga loans. You can repay your loan early, reducing the amount of interest that you pay. You’ll only pay interest for the days that you had the money in your possession, before you cleared your debt.
Late repayments incur a £15 charge (on the third day after the loan’s repayment deadline). Interest will continue to be added for up to an additional 30 days. At most, you’ll be asked to pay back double the value of the loan that you’ve taken out. Total repayment amounts will never rise above this cap.
Some borrowers find that they need a little bit more money than they originally expected. In certain circumstances, it’s possible to borrow extra cash within the original loan agreement.
Are Wonga loans available in countries other than the UK?
Wonga loans are available in the following countries:
- South Africa
In Spain, loans are available for up to 68 days. In South Africa, up to 36 days. In Canada, up to 45 days and in Poland Wonga offers short term loans up to 60 days. Also available in Poland are longer term loans up to a full 12 months.
Payday loans have been the subject of criticism in the past. With lots of input from the FCA, companies offering loans like Wonga are successfully clearing the slate. Wonga was a regulated short term loan provider offering protection and clarity to borrowers.
Borrowers could also enjoy online loan management, without the need for other interaction. Add to that the option to pay back early with no additional charges - this made Wonga payday loans a convenient product.
Cashlady can facilitate loans like wonga. If you are looking for an alternative now that wonga is gone, feel free to use our services.
CashLady Representative 49.9% APR