Comment editor Amelia Hiller celebrates the collapse of loan shark organisation Wonga, and hopes it signifies the downfall of its competitors once and for all
‘Straight talking money’. Wonga’s brand vision isn’t a complete lie. The company made it notoriously easy to obtain a payday loan, with individuals able to download the app and receive a loan conformation in a mere fifteen minutes. However, what isn’t so straight talking is the extortionate interest rates that customers have been charged for the past twelve years. At 1,509% APR, these loans come at quite a hefty price. Thankfully, people can no longer borrow from Wonga following its recent collapse into administration. This is nothing short of a victory for some high-profile figures, such as Michael Sheen, who has campaigned relentlessly to make the population aware of the dangers of payday lending and the greed of companies such as Wonga.
It’s no surprise that the company has been constantly criticised for its ‘immoral and unjust’ lending, with MP Stella Creasy referring to Wonga and other competitors as ‘legal loan sharks’. I completely agree with this assertion. You can argue the case that those who take out payday loans are just asking to be exploited. But if you situate Wonga within the current economic climate and the number of families struggling to make ends meet, then the company was simply preying on the most desperate and vulnerable of potential borrowers. It previously argued that its typical customer base is made up of those temporarily in need of extra cash and used this as an attempt to justify its interest rates. However, it’s impossible that Wonga’s customers only consisted of responsible borrowers. In 2014, the Guardian published an article containing interviews with those with astronomic debts to the company, and many confirmed that they had no alternative due to poor credit ratings or unemployment.
Having read the personal accounts detailing the spiral of debt created from borrowing with Wonga, my opinion of the company plummeted even further. I don’t think that it wanted to provide financial reassurance to ‘young, tech-savvy professionals’. Instead, I believe that it preyed on the financially vulnerable and aimed to extort as much money as possible from them in the process. Thankfully, Wonga’s reign of lending terror has finally come to an end. Despite its successes in previous years, the volume of those making claims caused the company to begin to struggle back in 2014, writing off £220 million of debt belonging to 330,000 customers. It appears that it never properly recovered, but I completely welcome its collapse. The demise of Wonga and it’s exploitation of the financially vulnerable hopefully brings us one step closer to abandoning the payday loans industry completely.
I believe that whilst stricter measures have been put in place to prevent other competitors from being able to do the same, there needs to be a wider level of discourse surrounding the true dangers of payday loans. Legal loan-sharking has been normalised within society and this needs to change. There’s nothing normal about a 1,509% interest rate, and to me, it seems that unless you really know what you’re doing, payday loans can easily lead to disaster.