[fuzzycloud]

(Original post by PJ07)
The concept of the company is fine.

My point is that their penalty rates should be regulated and forced down to more reasonable rates.

Even something like 100-500% would be more understandable, still very high; but 4000% is simply crazy.

Absolutely agree. There should be a legal limit to how much APR they can reasonably charge.

I think the idea is that most of their customers pay the loan off quickly, when they get their next pay cheque. The few that don't manage are stuck with debt that just keeps rising at a ridiculous rate, and that's how these companies make their money.

It's a terrible shame that the people who need loans the most can't get them, and have to resort to Wonga and others, with the associated high interest rates.

[Joe-89]

(Original post by Theturnbull9)
Yes I agree they're not hiding the fact that their APR's are so high, but can it be said that everyone actually know's what APR is and how it effects the loan your taking out, I bet most people just disregard the APR and see the sliding bars select £50 for example then repayment of £65 on a certain date etc.

That's a good point and maybe they should be forced to clearly show the consequences of not repaying the loan on time, even by a few days.

Also, I have to disagree with your first comment. Wonga advertise on the TV as a place to go for short term loans, they know for a fact that anyone wanting to take a short term loan out can't go anywhere else now due to the banks clamping down, who else is there to turn too.

I said that they aren't advertising themselves as providers of long-term loans.

Also, what about the people with drug and alcohol problems, its a quick injection of cash to feed there habit not thinking about the consequences.. I know it's a bit of the topic but I guess its pretty relevant.

Its just a debate hope I don't seem like I'm having a go haha!.

Thankyou for your response, It's really interesting to hear different points of view .

Yeah, as I said before, they should maybe do more to assess their applicants' abilities to repay.

And don't worry you don't come across as if you're having a go (I hope I'm not either!)

[Joe-89]

(Original post by PJ07)
The concept of the company is fine.

My point is that their penalty rates should be regulated and forced down to more reasonable rates.

Even something like 100-500% would be more understandable, still very high; but 4000% is simply crazy.

How would that be viable though? They charge such high rates because, in principle, they're dishing out (comparably) tiny loans for very short periods of time. If they set 100% APR on, say, a 3 day loan for £100, they would come out having made pennies in interest, and wouldn't be able to sustain themselves