Payday Loan information resource

The chief of Wonga payday loans has recently defended the company’s high interest rates and slammed UK banks. He branded the banks ‘an oligopoly’ and claims that his business only charges consumers 1% per day if they stick to their loan agreement.

Payday loan lenders have recently come under fire by MPs. Stella Creasy has been the main MP to step up the campaign against payday loan interest rates. Wonga currently offers an average interest rate of 2,689%. The main reason why Wonga has been targeted the most is because of its advertising campaigns and current social standing. It is one of the most well known payday loan lenders in the UK. Stella has tried to get a cap placed on the interest rates of payday loans but Errol Damelin, Wonga’s chief, has spoke out about the interest rates charged. He states:

“APR is totally irrelevant and actually harms the consumer”

He also went on to slam UK banks claiming:

“There is an oligopoly in retail banking. People have lost faith in banks. They are not transparent. They may offer a loan at 5 per cent but they make money on late fees and hidden extras and sell their customers all sorts of other deals to make their money.”

Damelin does recognise that some payday loan companies are similar to loan sharks. However he claims that Wonga.com is completely different. He claims that the company does not target those who cannot pay back the loans. Only 10% of the company’s customers have failed to pay within 60 days. Speaking of the company, Damelin says:

“We don’t operate from a PO box like some of these faceless companies. We are proud of what we do and are right here in London. A regulated lender isn’t a loan shark. We are aimed at Facebook generation that needs 24/7 access and they are willing to pay for the convenience.”

While many MPs still want a cap on the interest rates of payday loans, the Office of Fair Trading does not recommend them. It reviews the payday loans sector which is currently worth £7.5 billion, in 2010. It concluded that if interest caps were placed on payday loan lenders, it would encourage them to take their business underground. Damelin agrees with this and states:

“Caps on the interest charged will only encourage lenders to go underground. It would create loan sharks on our streets.”

Wonga is currently set to expand and it has already helped millions of people in emergencies. It was set up in 2007 and is one of the UK’s most well known payday loan lenders. The recent negative media attention has definitely angered responsible loan lenders. There are many reliable companies who do not target those who cannot pay the loan back. The only trouble is, it can be difficult for consumers to know which lenders are reliable and which will try to get them into debt. Wonga is adamant that it is a responsible company statistics do back up the company’s claims.