Payday Loan Business ModelPayment day loan business model
During the Great Depression, payday creditors who help less wealthy people make ends meet before the next paycheck arrived jumped on the country's main highways. Probably the payday credit business, despite punitive interest rates boosted, took money-lenders away from backyards where they were backed by bullies swinging basketball sticks.
The much denigrated payday creditor Wonga, founders of the two South Africans Errol Damelin and Jonty Hurwitz, went one stage further. Damelin, a purposeful former Israel Airborne fighter, introduced ground-breaking capabilities to an old business operation. The payday loans were coupled with the latest Israelis know-how and the latest technologies to enable a different kind of money-grubbing.
It would be difficult to see this from some of the recent reports in the press embodying Wonga as the Satan after the Financial Conduct Authority found that between 2008 and 2010 it sent 45,000 letters under the name of non-existent attorneys claiming to pay back debts.
Obviously, the use of forged regulatory references was foolish and inacceptable. This law firm is in great danger and the City of London PD was talked into resuming an inquiry that had previously been completed. As soon as a witch hunt has begun, it is difficult to stop, even though most of us are regularly exposed to such false regulatory pressures in our daily life, be it through park fees or electricity bill.
Damelin, who resigned from Wonga before the tempest over "legal letters" erupted at the end of last months, is a very concentrated character. As I was joining him for dinner when Wonga switched to start modus, he convinced a unwilling cook in one of London's most trendy restaurants to lash him into a large dish of Israel salad without the sauce because he didn't want anything else on the menue.
One thing he stated was that Hongga's model differed in several ways from other payday creditors. Second, his clients had to have knowledge of computing and own portable equipment such as smartphones and tables to be able to access Wonga's website and applications online. Both of these demands mean that Wonga, unlike other payday companies and backyard financiers, does not rely on the neediest of the needy.
Wonga, unlike other payday creditors, does not resort to the weakest groups in the community. This is an immediate real estate payment solution for those who need fast change. It is a fact that when Wonga clients pay back their credits quickly, the costs are lower than those of an unhedged loan default at the banks, where fees increase exponentially. However, the costs of a loan are lower than those of an unhedged loan default.
Wonga is now being corrupted because of the judicial writings as an supposed illegal organization, which is very regrettable.