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Where Wonga sets the standard - The payday lender's tomorrow
Speaking as previously stated, this paper will take a look at the futures of payday creditors due to the Wonga problems. Initially, Wonga was established in 2007, just before the 2008 loan crisis and the 2008 downturn. Though, payday loan became much more popular in 2008. However, this widespread acceptance followed the collapse of Lehman Brothers when it became much more challenging to obtain credits by conventional means.
The Wonga peaked in 2012 when they tried to allow immediate authorization of round-the-clock loan. Wonga had over 1,000,000,000 clients in the UK at that time, about 2% of the grown-ups. Among the most criticized campaign was the call to those who were clearly struggling with refunds to borrow to go on vacation.
The year 2014 was a particularly poor year for Wonga, which recorded a loss of 37 million pounds, after gains of 84 million pounds two years earlier: EZV applies affordable lending requirements to credits provided and requires a write-down of £220 million on credits. FCA limited interest rate at 0. 8% per annum and standard fees at £15.
In spite of a 10m deposit in £10m in cash held by its stockholders, the payday borrower defaulted and joined the management after almost a weeks of gambling about his whereabouts. After the changes in the EZV's regulations, payday borrowing has already developed into a more customer-oriented environment: As a rule, the loan now has to be repaid over a period of 6 - 12 years.
Guarantee credits have also gained ground. There has been more movement in the guarantee loan business, where interest is around 50%. It is now possible to take out these credits over a period of 3 years, which makes them much more attractive for people with bad financial standing. Except if interest continues to fall, the payday loan may have seen its day. What's more, it's a good idea to take out a loan.
Meanwhile, in the USA, where payday credits were established, many states have prohibited the granting of these credits. If I have a Wonga loan still pending, what happens? It is unlikely that they will also earn a profit, with the preferred and secure lenders being the first to be ceded.