Wonga is a UK based startup which provides loan amounts of between £50-£750 which are to be repaid within 1 month.
The company, launched officially mid last year, allows new members to borrow up to £200 at first (subject to a credit check) with the amounts increasing as the individual repays smaller amounts – building up trust. Interest rates for the loans are 1% per month, equal to13.8% APR.
Wonga is funded to the tune of £3m by Balderton Capital who have also invested in growing P2P lender Zopa.
There’s undoubtedly a place for this type of service and although I haven’t personally been through the process myself (maybe I should?), comments from people who have seem to all be positive…assuming you pay back within the time given.
Wonga’s CEO and founder Errol Damelin by Intruders.tv, the video is emdedded for you below. I also highly recommend you read The Guardians interview with the founder.
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via the great Springwise.
My mind is now wondering with thoughts about what happens if you DONT pay back the money in a month… ;0)
Graham
It’s actually 1% interest PER DAY which is a staggering 2334% APR (according to their website http://www.wonga.com/how-to-wonga)
I don’t buy their assertion that APR isn’t relevant.
Thanks for the mention – and for the comments – guys. We can understand surprise at the APR of the service. It’s an annual measure and also assumes compounding (which we don’t do), but no-one can argue the service isn’t completely transparent. A typical £140 cash advance for ten days costs a little under £20 and our customers are more than happy to pay a premium for the level of service they get. No-one else offers total flexibility or 24/7 deposits in minutes.
We use our world-class risk & decision engine to ensure we only lend to those people for whom the service is the right solution. To put that claim in perspective we only accept around 10% of applicants.
Finally, the premium we charge actually reflects the price of short-term credit if, like us, your goal is make a commercial success of people settling a loan on time and ridding themselves of debt. Traditional lenders make far more from tying you into long-term commitments, PPI products, or hidden fees and penalty charges.
I’ve used this service once before when I was in a pinch for cash and I have nothing but good things to say about Wonga.
I researched Wonga and a couple other lenders pretty thoroughly before use – I wasn’t going into this blind – and yes, the APR comes across as a staggering rate, but this is the ANNUAL percentage rate. Borrowers do not pay 2334% on a 30 day loan – that would be nuts!
I highly suggest visiting the home page and fooling around with the sliders to get a better idea of the cost of a loan… it will seriously put things in perspective.
pig in silk clothes …
third-world finance-man tactics, just internet enabled … rates are the same …
Gosh I wonder why SuzieQueue decided to visit this website to give us the benefit of her wonderful consumer experience. Coincidence? I think not. Greylock changing its name to Shylock. Accel going to Avvarice Partners
Well you know what they say , the people who feel the strongest impact of the recession are very rich people who stand to loose millions , and soon they will need a Cash Advance to save their businesses or even have something to eat