Are Payday Loans Becoming a Thing of the Past?

The recent collapse of Wonga has been ugly and well-publicised. The payday lender had a less than favourable reputation, and was seen by many as a business model that preyed on people who were either desperate or didn’t understand what they were getting into, due to the extortionate interest rates the company charged on its loans.

After a Financial Conduct Authority (FCA) ruling in 2015, Wonga’s bank balance began to slide too. The FCA forced Wonga to slash its interest rates and ensure that borrowers went through a stricter authorisation process. As a result, Wonga’s customer numbers fell from over a million in 2013 to 220,000 by September 2017¹, with this huge loss of profit culminating in the company going into administration earlier this year.

Despite the company’s collapse, Wonga customers’ have been told they will still need to pay back anything they have borrowed. If you are affected by this and still have outstanding Wonga loans that you are struggling to pay, please contact us now for instant help with your debts. 

Does this mean the end of the payday loan?

Wonga’s demise raises the question of whether or not the payday loan as we know it is coming to an end. There are still many companies offering short term loans out there, but many now have minimum terms of at least a month in order to maximise profits.

The parent company of QuickQuid and Pounds to Pocket, CashEuroNet, is facing a multimillion-pound bill after receiving a whopping 4,692 consumer complaints in the first six months of 2018². Another big factor of Wonga’s collapse was the huge compensation bill it was charged with after it received 4,250 consumer complaints during the same period, causing many to question whether or not firms such as QuickQuid are heading the same way as Wonga.

It’s especially concerning for the company considering that the ombudsman service which deals with complaints charges £550 for each complaint it deals with, even if the case isn’t successful. This would amount in case fees of £5m for CashEuroNet, and that’s without the cost of actual compensation for consumers.

For people who’ve been victims of payday loan companies in the past, this could be welcome news. In one recently well-publicised case, Danny Cheetham took out a £100 payday loan when he was 19 for a night out whilst at university, and is still in debt now at 29 after his debts spiralled out of control and he began using different payday loan companies to pay off others. He’s set to clear his debts by the time’s 30, but thinks he’s paid almost £19,000 in interest to payday lenders over the course of the last 10 years³.

Are you in a large amount of debt due to payday loans? If you’ve got creditors chasing you any reason, including fees from payday loans, then why not give us a call? With one of our personalised debt solutions we could not only get your creditors off your back, but also considerably reduce the amount you pay back.

If you’re ready to get control over your finances again and take the first step on the path to becoming debt-free, then get immediate help online now or give us a call today on 0800 316 1833 .

^{1 – Source: https://www.bbc.co.uk/news/business-45343042 
2 – Source: https://www.theguardian.com/money/2018/sep/12/casheuronet-uk-payday-lender-faces-multimillion-pound-bill 
3 – Source: https://www.msn.com/en-gb/news/uknews/just-when-you-thought-youd-read-it-all-about-payday-loan-sharks-i-borrowed-%C2%A3100-for-a-night-out-and-ended-up-owing-%C2%A319000/ar-BBNQJga}