Wonga is a new online money lending service which offers small loans (under £200) for a maximum period of 30 days. The site is all wrapped up in cutesy bubble gum graphics, but there’s no way to ignore the massive 2000+ APR interest rate the company is earning on these loans. Back in the day that was known as loan sharking, wasn’t it? The company has just scored a massive $22m injection of VC cash, which says a lot about the current times too.
Interestingly enough, microlending pioneer Kiva has also just started to lend to small US businesses, in addition to its original developing world remit. What a sad indictment of our broken economic system, and it begs the question of whether we really should be generating more debt to get us out of a debt created crisis? Answers on a worthless banknote to…
Applying for Wonga is simple. There’s no nightmare paperwork to tackle, documents to fax or cheesy hold music to endure, because our unique service is online from start to finish. To begin, use the sliders on the home page to decide exactly how much cash you want to borrow and how many days you need it for. We’ll show you the full cost and, once you’re happy with everything, click apply. We’ll then ask for some personal details and banking information for our super-fast credit check.
APR is totally irrelevant for short-term loans like this. I checked out the site and their explanation actually makes a lot of sense. The costs also looks pretty damn clear, so it seems people can make their own minds up. You've obviously not had to go over your overdraft limit in a long time, because otherwise you'd know the fixed fees charged by banks are far bigger than the cost of a service like this. I've not used this particular site so can't vouch for it, but taking a pop at the APR alone on a service like this is misleading, just like the numbers themselves.
Hmm…I've not gone over my overdraft limit Bruce, because I made sure a while back to agree a limit which suits me, and the bank seem to be quite willing to help me out with a handy pre-arrangement of this sort at a very reasonable rate. I'm not having a 'pop' for the sake of it, but any way you look at it, this is expensive money, at a time when expensive money is probably not what most people really need.