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Payday Lender Targets Students Online, Resulting In Page Removal

by Jim ONeil on January 17, 2012

in Payday Loans News

Higher education reforms enacted by the UK Coalition will cause university fees to increase to as much as £9,000 annually in 2012.

This has thrown many students into a state of panic and some companies are taking advantage of the situation. As the result of a media campaign, the popular online payday lender Wonga recently removed a highly controversial website page “targeting students.” Wonga may be the first company to come under attack but it is not likely to be the last.

Many students are now wondering how to afford university attendance. Lenders may now play on this unfortunate situation in an attempt to get students to take payday loans.

Students, like other consumers, should be aware of what they are doing when they apply for these no credit check loans.

Entering this borrowing arrangement without a complete understanding of the fees and terms can leave students with more financial issues than they anticipated.

The Web page removed from the Wonga site noted that though a student loan is usually cheaper than a personal loan, students may end up borrowing more than needed.

This could accumulate a “nasty debt” that may take years to repay following graduation, the page noted. Wonga then claimed that though its loans APR are much higher, the money is borrowed for only one month.

Charities, students, and MPs protested to Wonga, requesting that the page be removed, which it was within 24 hours.

Wonga claimed that the page was several years old and existed due to search engine optimization. The company published a statement noting that it listens to the public and customers.

The “old” article led to “misunderstandings,” it said. The statement noted that lending decisions are made based on various types of public information, not educational status.

To qualify for a Wonga loan, a student must have regular income, said the company, and students are a “miniscule proportion” of its customer base.

Before the page was removed, Martin Lewis from Moneysavingexpert posted it to Twitter, telling his 82,000 followers that Wonga was a “moral disgrace.”

The lender denies targeting students but this does not mean a general warning is not warranted. Before applying for an alternative loan with a private lender, students should conduct thorough research.

These loans APR can be as high as 5,000 percent, representing a very expensive form of financing.

Members of Generation Y have grown up in the online era. This is likely to make them trust online information more than older generations do.

A user-friendly interface, appealing colors, and convincing content can be enough to make these youth agree to something that may not be wise.

The Wonga page suggested that students use payday loans for emergencies or other “unexpected events.”

Campaigns like this could be successful because they focus on daily situations that anyone might encounter. The National Union of Students referred to this as “predatory marketing.”

Many students are not financially experienced so they may not understand the multiple consequences of these no credit check loans.

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