The firm who spearheaded the rise of ‘legal loan sharking’ revealed yesterday it is to wipe debt from more than 330,000 customers – costing the company a total of £220million.
Wonga is also changing its affordability checks to clear customers that under new procedures would be deemed unable to pay back the loan at the time they took it out.
The lender admitted errors in its lending practices and explains it should have never really lent the money in the first place.
With these backtracks and refunds in mind, MM took to the streets of Manchester and asked:
Would you consider ever using a payday loan?
Less than 10% said they would use the cash stop-gap, highlighting the controversy and mistrust with the lenders.
The general view among Mancunians was that repaying the vulnerable customers may be the right thing to do – but Wonga were at fault for handing out the loans in the first place.
Student Patricia Foltynowicz 18, of Kingsway, explained how she never has and never would take out a payday loan.
She said: “I think the company is acting correctly as it is trying to help but if people can not afford it they should do without.
“They probably are trying to clear their name so they don’t lose custom but I think they might have the right intentions deep down.”
However, council employee Gary, 55 from Beswick, thinks otherwise.
He said: “They shouldn’t have given out the loans in the first place and are doing it before they are forced to.”
The changes have come about as a ‘voluntary agreement’ between Wonga and the Financial Conduct Authority (FCA).
Eliana Tsangaridi, a 28-year-old architect from the city centre, agreed with this stance.
She said: “For the individuals that take out loans its like gambling.
“But in the defence of the company, no one made the decision for them to lend money, it was the person’s choice.”
Sales manager Shannon Holden, 36 from Rochdale, spoke of her experience with payday loans.
“Every month my credit card is up to the limit and I took out a payday loan to tide me over and paid it off within days and had no problems with them,” she said.
“But I can understand the danger in a lack of knowledge.”
Manchester-based education recruiter Becky Andrews, 26, said: “No one tied customer’s hands behind their backs – they chose to take out the loan.”
“I remember earlier in the year when Wonga sent out fake legal letters.
“For people who can afford the interest it is a good little top-up but historically the company don’t have a great record.”
Greg Davies, 28 a retail assistant from Stockport, spoke of the general ‘misleading’ nature of payday loans.
He said: “The loans are paid into people’s accounts within minutes so it’s obvious no checks were being done.
“It’s the morally right thing to do if they knew full well customers didn’t have a chance of paying back the extortionate interest rate though.”
Currently the interest rate for the company has an annual figure of around 5853% APR.
And the brutal rates can soon cause cash issues to pile up, warns finance worker Helen Ashby.
The 35-year-old from Rochdale said: “They seem like a quick fix but soon they snowball into big problems.”
Her colleague Maria, 39 from Oldham, added: “I hope that this move is the first of many that force higher restrictions on applicants and companies.
“Lending needs to be made more honest and law-abiding.”
Retail assistant Becky Hughes, 22 from the city, spoke of how she sees the move in a positive light for loans in the future.
She said: “Obviously, there is going to be a drop in business for them, but maybe the move will build trust in the general public to take a little help when needed without fearing the consequences.”
Architect Deborah McLean, 26, based in the city centre, said: “Payday loans generally are taking advantage of desperation and it is not fair.”
Wonga have said that they are also scrapping interest that has amounted on the minor loans for a further 45,000 customers.
Deborah said: “I think they need to be regulated more strictly as, yes the customers have dug their own hole, but they should not be allowed to grant loans with no idea of the customer’s financial status.”
Image courtesy Wonga via YouTube with thanks