August 2018 saw the collapse of the UK’s loan-shark giants Wonga; who became infamous for its high interest rates and targeting of the elderly on television commercials.
Wonga were no strangers to controversy with footballer Papiss Cissé refusing to wear a Wonga sponsored Newcastle United football kit for religious reasons. The Church of England also had an input – calling the lenders “morally wrong” in July, 2013.
Why did Wonga Collapse?
Wonga went into administration after losing its financial battle to stay afloat.
In 2015 Wonga and other loan sharks were capped on interest rates to a maximum of 0.8% a day, which was a considerable blow to Wonga, as this slashed profit margins.
Subsequently, in mid-2017 the loan giants reported a loss circa of £66.5m, stating it was a growing concern. During this time Wonga also stated it had 220,000 customers and £430m in outstanding loans (these figures are likely to have decreased since).
During the same period in 2017-2018 Wonga saw a rise in compensation claims against them, which cost the company £550 per claim to process, regardless of whether the claims even came to fruition or not. This was a critical blow to company and was the final nail in the coffin, which saw the collapse of Wonga in 2018 and the end of an era with extortionate loan sharking.
Wonga is now closed, but still is paying off some of the compensation claims, but the financial ombudsman has stated that any outstanding had no protection offered to consumers under the FSCS in this instance.
Wonga Loan – What’s the Alternatives Now?
There is no doubt that Wonga did serve a purpose and that in critical circumstances a loan option may be viable to an individual.
At Low Interest Loans UK we’d recommend always reviewing any other avenue before taking a loan option, but if a loan option fits your particular circumstance, we would advise to look into low interest loans.
A good way to find a Wonga loan alternative (without the extortionate interest rates) is to look at loan brokers, who display a large array of lenders and repayment plans and to find a loan option that best fits your personal financial situation.
Where to Find Help to Manage Your Debts
If you have a scenario similar to what has been mentioned above or would like to find help on managing debts in a responsible way then there are a number of charitable and trustworthy organisations such as Step Change who are set up to help those who need help managing their finances.