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Customers seeking to stay afloat until their next paycheck may be making things worse by not using responsibly. Many short-term loan companies are now offering loans with interest rates of more than 4,000%. Without a credit check, many customers are spiraling down in debt with little options left. Late Fees Payday loans in the UK, companies such as Wonga, have drawn major criticism for its high interest pay structure. However, their chief executive has shot back saying they appeal to the needs of the “Facebook generation.” Although, this may be true, the pay structure is at its highest that it’s ever been in both the UK and the US. Legality Many have called for a payday loan interest cap so protect customers from predatory rates. Both the British parliament and US government are in the process of creating a bill to do just that. Wonga is insistent, however, that they are doing nothing wrong and that they are very clear that their customers should only use their short-term loans in case of emergency. Wonga, again, insisted that they are there for the “Facebook generation” that needs access to cash 24/7 and that their company, fills a need. Last year, the UK’s Office of Fair Trading reviewed the payday loan structure and recommended that parliament not instill a cap. Wonga was established in 2007 just as the global financial crisis hit and have traded strongly in the following years. Just recently, Wonga raised enough capital for expansion. Whether a short-term credit company demands 1,000% or 4,000% or interest on their loans, customers must be clearly aware of the pitfalls that accompany using a payday loan service. Although, Wonga may be a predatory company, the legality of what they are doing is sound. Payday loans should only be used in an emergency basis. Mark loves helping people out of tight financial situations. If you find yourself in need of a little quick cash, Mark suggests using payday loans UK.
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