Are Wonga Loans A Scam? Hidden Interest Charges Explained
There are many people out there who will tell you that Wonga loans are a scam. Are these claims true? Are payday loans from Wonga really a scam or is this a legitimate company offering good value for money? Well in this article we take a close look at Wonga and see what the company is all about. We also tell you about hidden charges and if Wonga is indeed a scam.
Wonga are currently the UK’s biggest payday lender. They offer short term loans that are easy to get hold of. The company say they can have the money in your bank account within 24 hours of application. They advertise all over the internet and TV and are seen as the biggest of all the payday lenders in the UK. But are they trustworthy?
A Closer Look At Wonga
The fact is that Wonga are indeed a well established company. This is not a company who are going to steal your money or rob you blind, at least not on the face of it. The main reason they come in for bad press is due to the extremely high APR they charge on their loans. But realistically as these are only very short term loans, the APR figure is irrelevant.
For instance, if you were to borrow £100 over 7 days, this would cost you a total of £112.78. So you would only be paying £12.78 for the service you receive. However, the APR on this is a staggering 4214%. But as you can see that figure is really not important. If you pay your loan back on time then you are not really paying that much for your loan. So in this regard the company is certainly not a scam, they do in fact offer a quick and easy service that is reliable and certainly very handy for many people.
Hidden Interest Charges & Costs
The problem however comes when people do not pay their loan on time. Wonga state that they will do everything they can to collect the money from your bank account on the agreed date. If for any reason though they are unable to do this, then the problems can start. This is where many people claim Wonga are a scam. People can run up huge debts when they don’t pay their loan back on time. People say that Wonga do not give them warning of the hidden interest charges or penalty costs. So is this true?
Well in the small print on their website it does mention what will happen if you fail to pay back your loan. However, it is not all that easy to understand. If you miss the payment date by even a day, you are hit with a fee of up to £20. This is a standard charge and the company say it is to cover admin fees for trying to recover the money. Then you start to accumulate interest on your missed payment. This can add up very fast and before you know it you could be paying double back on what you originally borrowed.
There are some horror stories out there if you look for reviews on Wonga. Some people have gotten themselves into financial difficulties and end up in masses of debt. If you cannot afford to make the repayment then you should steer well clear of using this company.
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So Is Wonga A Scam Or Not?
The word scam basically means to swindle someone by trickery. Wonga do not trick anyone into borrowing money, they do not swindle people. However, they do charge people very high interest on missed payments. They do have lots of hidden charges that are very hard to identify. They can cause people to get into some very serious debt.
If you pay your Wonga loan back on time then this is a very good reliable company. The issue obviously comes when people do not pay their loan back on time. The fact is that you can not really call Wonga a scam, all their terms and conditions are there in writing for customers to read. People who claim that this company is a scam have no doubt had problems with them in the past, but use them in the correct way and you should steer clear of any serious problems.
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