Wonga
Remember when it used to take five days to transfer money from one account to the other? Remember all the irritated letters to TV and radio consumer programs? In 2009, the banks finally got their act together and it is now possible to transfer money on the same day. A good idea? I’d say so. However the law of unintended consequence has now kicked in with the arrival of Wonga.com.
I heard about Wonga on the radio yesterday and later saw their advert on the London Underground. Wonga are a company who will give you a short term loan and provide the money in around 15 minutes. The application is handled using the Internet via your PC or mobile phone. The customer uses a simple “slider” to select how much money they want to borrow and how long they want it for. Presumably credit checks are performed automatically and, if approved, the money is squirted into the customers bank account within minutes. A good idea? I’d say not.
The world has only just gone through a financial crisis which broke all sorts of records in all sorts of ways. The blame has been placed firmly on cheap and overly available credit. The result has been to put the western world in massive debt to a totalitarian and undemocratic Chinese regime.
While the experts rake over the details the public are disgusted by the greed of the banks and the incompetence of the organisations responsible for monitoring and controlling credit risk. Even Gordon Brown, the British chancellor on whose watch Britain’s economy was flushed down the toilet, claimed that he knew nothing of what was going on. While the world and his wife knew that anyone could get a “self certified” mortgage by lying on their application form Gordon Brown knew nothing. One wonders whether Brown knows about Wonga. Does he know that Wonga are targeting young people? Check them out on facebook and twitter.
British young people have a reputation for liking their booze. Now we have a company which is allowing them to buy credit when they’re drunk. You’re out with your mates, you’ve been in the pub all evening and now everyone is off clubbing but you’ve run out of cash. No problem, pull out your mobile and click, click, click you have £200 dumped in your bank account. What’s not to like?
Well how about a typical APR of 2,689%
Wonga is the epitome of greedy and irresponsible lending and one has to ask: Are our regulators asleep or simply stupid?
Let’s be clear who is behind these greedy, irresponsible people. Wonga list the following Joint Venture partnerships amongst their investors:
Balderton Capital
Greylock Partners
Accel Partners
Dawn Capital
Here are the people behind each partnership. I encourage you to click on the link, view the thumbnail pictures and then Email these greedy and irresponsible people and tell them in, polite but firm terms, what you think about loan sharks. If you know them then disown them.
Balderton Capital
Barry Maloney
Mark Evans
Bernard Liautaud
Tim Bunting
Dharmash Mistry
Jerome Misso
Roberto Bonanzinga
Andrew Nutter
Harry Briggs
Rob Moffat
http://www.balderton.com/our-team/
Greylock Partners
Arvin Babu
Aneel Bhusri
Tom Bogan
Asheem Chandna
Charles Chi
Roger Evans
Isaac Fehrenbach
Donald Fischer
Bill Helman
Reid Hoffman
Bill Kaiser
Ivy Li
James Slavet
David Strohm
David Sze
David Thacker
http://www.greylock.com/team/team/
Accel Partners
Kevin Comolli
Sonali De Rycker
Bruce Golden
Harry Nelis
Jeremiah Daly
Spencer Lazar
http://www.accel.com/people/index.php?group_id=122000
Dawn Capital
Josh Bell
Norman Fiore
Haakon Overli
Chad Raube
Glen Drury
Dr. Arjang Zadeh
http://www.dawncapital.co.uk/welcome/our-team/the-dawn-team.aspx
There’s a fundamental flaw with this entire argument – APR and actual interest charged… Completely different hings.
Chris wrote: “There’s a fundamental flaw with this entire argument – APR and actual interest charged… Completely different things.”
What an absurd statement! APR is the conversion of an non annual interest rate into an annual interest rate for the purposes of comparison.
When one credit provider tells you he will charge you 1% a day over six weeks and another says he will charge you 5% a week over six weeks you can convert both to an APR and compare to see which is best.
By attempting to discredit APR Chris and Wonga are undermining customers abilities to compare Wonga rates with other providers. They are trying to prevent people seeing that Wonga is an absolute rip off.
Think about it.
Wonga lend someone £100 and after 5 days they get back £110.70 (figure from Wonga web site). After that the money will be instantly lent out again. So if they lent out just the £100 again they’d get back another £110.70 after the next 5 days.
There are 73 5 day periods in one year so after a year Wonga have got back £10.70 X 73 which is £ 781.10 !!!!!
But it doesn’t stop there because the interest will compound so that they will lend out all those £10.70s and they in turn will bring in money.
I think there is a fundamental flaw in Chris’s argument. He’s TALKING BOLLOCKS!
>What an absurd statement! APR is the conversion of an non annual interest rate into an annual interest rate for the purposes of comparison.
I used wonga.com loan ones last year, and I do believe they provide a very useful service for critical moments… I understand that APR looks ridiculous, but I agree with their explanations here: http://www.wonga.com/money/is-this-apr-expensive. You are talking about interest compounding, but there is no compounding in their loans. And unlike long-term mortgage loans which led to world financial crisis, this service doesn’t cause long-term financial obligations.
Thanks for the comment Almaz.
Do you mind sharing the details? How much you borrowed, for how long and how much the fee was?
£150 for 8 days, repaid £169. It’s not cheap, but a great price for their speed and convenience.
Wonga employ dubious tactics including letters from fictional ligitation companies like tjhe non existing Chainey, D’amato and Shannon. They clearly are not regulated properly and therefore should not have a consumer license