Follow Us on Facebook Follow Us on Twitter Follow Us on Google+ Follow Us on Pinterest Follow Us on Tumblr Visit our YouTube Channel Subscribe to our Feed Subscribe via FriendFeed

Connect With Us

The Guardian Explores Wonga

by Jim ONeil on March 7, 2012

in Payday Loans News

Intrigued by advertisements from UK payday lender Wonga, The Guardian recently explored the popular payday lender. The corporate culture of Wonga is nothing less than cheerful. Radio and television ads feature dancing puppets and approved borrowers receive upbeat email messages filled with exclamation points.

These include a note indicating that funding is in process and a thank you message when a repayment is received.

Everyone at Wonga seems to be all smiles and they have good reason to be, as business is booming. The company was established just four years ago and in this brief period, it has issued about 3.5 million short-term loans online. Average loan amount is £260 and the maximum loan for a first time customer is £1,000, with a maximum initial loan term of 30 days.

Wonga spent major advertising dollars to achieve its success, increasing its spending from about £22,000 to £16 million between 2009 and 2011. London buses promote the brand, as do the Heart of Midlothian and Blackpool football teams.

Wonga attributes its success to fast, technologically-driven service that was not available before it entered the industry. The customer base is described as Internet-savvy, expecting immediate gratification, and ostracized from loans bank offered. Customers can use a smartphone to apply for a loan and they usually receive the money within minutes of approval.

Not everyone is smiling about these payday loans. Critics say Wonga offers expensive credit to consumers who are unable to get cheap loans through conventional avenues. The most outspoken campaigners call these no credit check loans “immoral and unjust” and refer to the lenders as “legal loan sharks.”

Wonga promotes transparency in its ads but is not quick to reveal its 4,214 percent representative APR.

This is not the only difference in perspective between Wonga and some outside the company. The average customer is portrayed as a young professional with a regular income and access to conventional credit. According to Wonga customer surveys, 95 percent of these individuals are “satisfied” with services they receive.

MPS and debt counselors beg to differ, saying that payday loans are creating financial difficulties for an increasing number of already financially vulnerable consumers. According to Citizens Advice, the number of people with issues related to payday loans has quadrupled in two years.

Through its advertising, Wonga tries to set itself apart from the competition. It does not anticipate being driven out of the market through the ongoing Office of Fair Trading payday lending industry investigation. Wonga head of marketing Darryl Bowman stated that, “Wonga are the good guys.”

The company provided The Guardian with customers that attest to this, though there are other customers who were not as pleased.

There is no doubt that services provided by Wonga and other payday lenders are convenient. Consumers can get cash quickly and easily any time of day. No justification or need to fax supporting documents, no requirement to talk to anyone at the company.

Wonga considers its services more like bank overdrafts than payday loans. According to Mr. Bowman, the company is an Internet technology business, with financing its secondary focus.

Comments on this entry are closed.

Previous post:

Next post: