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I'm very doubtful about Tony's assumption that the same people who borrow from credit unions are those who borrow from Wonga and the like.
As for his argument that Wonga charge high rates beacuse of the high default rate among its borrowers, that does not sit well along the claim that Wonga rejects 60% of all applicants, so it presumably gets the ones likely to repay the loan. A quotation from Wikipedia (which I haven't got the time to follow up) also says, "...Wonga's technology could reliably reject two thirds of applications and predict to 93% accuracy the ability of a customer to repay a loan." So if the vast majority of their customers do repay, the high interest rate is even less justifiable, as is any remaining belief that they are responsible lenders.
The real problem, as I have said elsewhere, is people's priorities, aspirations, mindset, the consumer society, the pursuit of image, the cult of celebrity/status and so on.
As far as I'm concerned, if you can't afford it you don't get it. I would do almost anything rather than borrow money - from anywhere (a mortgage excepted).
Edited by FP on 26/07/2013 at 15:38
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I don't think people borrow from Wonga to have a new kitchen fitted. Generally they're skint desperate people with little other option who don't realise that signing onto benefits actually is a better option than going to these sharks.
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(I'm very doubtful about Tony's assumption that the same people who borrow from credit unions are those who borrow from Wonga and the like.)
Well the Archbishop of Canterbury ,obviously disagrees ,he wants to subsidise a credit union business to compete with them .I don't suppose he'll ever admit that it was a disastrous idea ,as the losses mount and the c of e is forced to withdraw from a business that's best left to professionals , not well intentioned individuals .
(As for his argument that Wonga charge high rates because of the high default rate among its borrowers, that does not sit well along the claim that Wonga rejects 60% of all applicants, ) etc
Wonga reject 60 % of all applicants because they have an horrendous record of non payment to companies similar to them , put simply the past credit history of the rejected applicants show that any money loaned to them will never be recovered , the successful borrowers won't pay on time ,wonga staff will have to ring them and knock on their doors to recover the loan .
(The real problem, as I have said elsewhere, is people's priorities, aspirations, mindset, the consumer society, the pursuit of image, the cult of celebrity/status and so on.p)
(As far as I'm concerned, if you can't afford it you don't get it. I would do almost anything rather than borrow money - from anywhere (a mortgage excepted).)
Well I never thought I would agree with FP ,however the two paragraphs above are difficult to disagree with . My only point is that there is nothing wrong with credit to obtain the the things we want ,but don't borrow more than you can afford to repay and don't commit to a payment that's difficult to maintain if your circumstances change .ie don't be reckless feckless .
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Today's news reveals that the Church of England pension fund is an investor in the company that is funding Wonga - you couldn't make that up could you?
I do not have a problem with the way that Wonga conducts it's business. Anybody who borrows money from them knows EXACTLY how much they will have to repay, it's so transparent it's made of glass - do you know how much your mortgage from your bank or building society will cost you over the term of the mortgage? No of course you don't- it's shrouded in mystery and uncertainty. But banks and building societies are regarded as responsible lenders, Why?
I would pay more attention to someone who complained that they borrowed 40 K to buy a house and 25 years later they found out that they they had repaid something of the order of 85 - 100 K to borrow that 40 K, that's what I call irresponsible lending.
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Tony g. The £85,000 protection is paid via the FSCS, an insurance paid for by customers of regulated banks including credit unions. The taxpayer does not pick up the tab, unlike it did for all the banks which were on the brink of failure 5 years ago.
Compared to how much those bailouts cost, credit union bailouts are chicken feed.
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If the customers of regulated banks pick up the bill ,then ultimately were all still paying ,so what point are you making ?
Because the cost of bailing out the banks was horrendous ,it doesn't justify the lower cost of refunding credit union depositors .
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Because the cost of bailing out the banks was horrendous ,it doesn't justify the lower cost of refunding credit union depositors.
It may not justify it but it does prove bleating about it is pretty pointless and futile.
In the greater scheme of things, you're ranting about stuff which doesn't matter and that makes no difference. Really.
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well, having absent-mindedly trawled through this thread, I find myself disappointed at the self-righteous attitudes of some posters, towards debt.
All I will say is, none of you know what may lie around the corner.
When you get married, it is under the expectation it is for life.
Statistically, that is far from the case.
So all those marvelous financial plans, mortgages, loans, etc suddenly become your worst nightmare.
Got a job for life?
Some sort of 'career?'
Fall off a ladder whist cleaning your [mortgaged] gutters, and your lives could take an entirely unintended change of direction.
Those who were employed , by such as the quoted 'Welcome' finance, might well today be amongst those being vilified for bumping along the bottom of the economic pond...out of work, unable to find appropriate employment.
I don't have any debt whatsoever...in the accepted sense.
Then, I don't have a lifestyle most on here would find acceptable, either.
But,if I were to apply for 'credit' anywhere, I would probably be rejected.
Because I don't have debts.
Therefore have little or no record of re-paying credit, without default.
It is a strange aspect of the economic society we live amongst, that those deemed a good risk,credit-wise, are those up to their necks in debt.
The argument about 'choices' doesn't work either.
The purpose of advertising is about pressure. If we all were able to exercise free will, why do the financial industry spend so many billions on advertising, if it didn't achieve the objectives?
Like those who sell sofas, the business models seem based upon exploiting folks' lack of knowledge and awareness, about their choices, their options.
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(well, having absent-mindedly trawled through this thread, I find myself disappointed at the self-righteous attitudes of some posters, towards debt.)
Alistairq
I've no objection at all to anyone borrowing money to acquire the things that they want .We all do it even if its only a mortgage .
The whole point of my original post ,is that I object to the proposition touted by politicians and now the church ,that customers of wonga are in some way victims ,that should be in some way be subsidised by the rest of us .
Wonga customers exist because they have defaulted on other loan organisations such as credit unions .
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"Wonga customers exist because they have defaulted on other loan organisations such as credit unions."
So you keep saying. If they have a poor history of repayment they are unlikely to get a loan from the likes of Wonga, who apparently have a refined system of predicting the likelihood of defaulting. I've said that before, too.
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("Wonga customers exist because they have defaulted on other loan organisations such as credit unions."
So you keep saying. If they have a poor history of repayment they are unlikely to get a loan from the likes of Wonga, who apparently have a refined system of predicting the likelihood of defaulting. I've said that before, too.)
Having worked with sub prime finance companies ,I'm qualified to comment ,why do you think borrowers use wonga ?
It's because they've defaulted on prime finance lenders ,and quite possibly medium rate lenders such as provident 250% apr.
As I keep saying ,the majority of wonga s borrowers are not hapless victims ,they're at best irresponsible with little thought to tomorrow .I want it now is their major mindset .
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"...why do you think borrowers use wonga ?
It's because they've defaulted on prime finance lenders ,and quite possibly medium rate lenders such as provident 250% apr."
You just go on repeating it, but it doesn't make it more convincing.
Let's do some thinking, Tony. Wonga rejects around 62% of its applicants (see tinyurl.com/n2hyxja). I find it hard to believe that it does not check their credit status. Is it likely that someone who has defaulted on a credit union loan will get any money from Wonga?
Having said that, the genius of Wonga is the algorithm used to determine an applicant's likelihood of defaulting, which means that someone who might be rejected by other lenders may not be rejected by Wonga - hence the questions about car ownership and so on.
'There are numerous searches that Wonga's algorithm could use... including: "192.com for electoral roll information, Zoopla's estimates of house values, business and director information from Companies House, genealogy databases – even web searches for the subject's name combined with keywords like 'fired, 'retired' or 'redundant'. Even data we see as traditionally offline is often available through subscription services or more freely." One bank we spoke to speculates that Wonga spends huge sums on databases and traditional credit-ratings agencies – anything to improve the accuracy of its assessments.' (from tinyurl.com/3uhj7pz)
Wonga has a default rate of around 7% - about the same as traditional banks. That means that the vast majority who borrow from it do not default. Again, go you expect us to believe that someone who has defaulted on other loans suddenly becomes able to repay Wonga?
From the Telegraph article cited above, the following is interesting: '...their ideal customer is a young professional who wants speed and convenience; but it's also worth bearing in mind that a huge number of people who fit the definition of young professional have limited access to either credit cards or overdrafts, as a result of being credit blacklisted while at university. Blacklisting for a stupid mistake at 21 easily lasts until your late 20s; Wonga realised these people were a decent risk while the banks picked their noses and repeated "computer says no".'
The true nastiness of Wonga is the sheer exploitation it operates. Their normal advertised APR is 4,124%, but an extension of 30 days on a loan would ramp that up to a scarcely-believable 11, 913%. That is a huge rate of return on their invested capital, which is scarcely dented by a default rate of 7%.
Edited by FP on 28/07/2013 at 21:41
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FP
(From the Telegraph article cited above, the following is interesting: '...their ideal customer is a young professional who wants speed and convenience; but it's also worth bearing in mind that a huge number of people who fit the definition of young professional have limited access to either credit cards or overdrafts, as a result of being credit blacklisted while at university. Blacklisting for a stupid mistake at 21 easily lasts until your late 20s; Wonga realised these people were a decent risk while the banks picked their noses and repeated "computer says no".')
At last, a more considered opinion ,
FP surely the above supports my original post that wonga users are not hapless victims being abused by the evil finance company .
While I don't accept that the above profile is the typical wonga borrower .The profile of the individuals above , are of people well able to make a decision based on costs that are always very clearly laid out in a wonga loan .No one is deceived by wonga as to how much they will borrow and repay
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Jamie.
(It may not justify it but it does prove bleating about it is pretty pointless and futile.
In the greater scheme of things, you're ranting about stuff which doesn't matter and that makes no difference. Really.)
On that basis theirs no point for forums like this to exist at all ,I see this forum as an opportunity to express my views and to be able to understand the views of others ,many of which I disagree with but do want to read .
But perhaps the forum should only exist as a place for you to take the mickey out of confused pensioners ,26 July .who can't tell the difference between a jag or an Audi ,now that's a post that really matters .
Edited by tony g on 28/07/2013 at 13:15
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So what's your solution for protecting savers deposits from banks going bust?
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(So what's your solution for protecting savers deposits from banks going bust)
A completely different question ,why not start a new post to explore it .
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It's because they've defaulted on prime finance lenders ,and quite possibly medium rate lenders such as provident 250% apr.
You've repeated the same line about 17 times now. Presented it as undeniable fact.
Saying it many times doesn't make it true, especially as you've provided no evidence for your claim. It's another one based on 'what my mate in the pub said', 'what I read in the Mail' and 'what my mate next door does.'
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10 years as a finance manager ,arranging prime and sub prime prime finance ,qualifies my viewpoint .
It's the way the credit checking system works ,if you have had credit and paid it on time ,you can obtain further credit at a decent rate .
If you don't pay on time ,take on to much credit ,the only option becomes sub prime .welcome ,wonga and the like at stupid rates .
So my viewpoints based on experience ,not based on mates in the pub ,are your mates in the pub amused by your stories of confused pensioners ,you must have some great nights out !
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"If you don't pay on time ,take on to much credit ,the only option becomes sub prime .welcome ,wonga and the like at stupid rates ."
This is getting tiresome. You just keep repeating it. You think you know what you're talking about. You ignore evidence to the contrary.
You say you want to listen to other people's views, but there seems to be no meeting of minds.
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("If you don't pay on time ,take on to much credit ,the only option becomes sub prime .welcome ,wonga and the like at stupid rates ."
This is getting tiresome. You just keep repeating it. You think you know what you're talking about. You ignore evidence to the contrary.
You say you want to listen to other people's views, but there seems to be no meeting of minds.)
Okay FP
,I've expounded my theory why people take out loans from companies like wonga ,I've seen the credit files of individuals who I organised sub prime finance for ,with a similar lender ,welcome finance . So my viewpoint is based on experience .
Please give us your opinion ,why would anyone who's not credit impaired borrow a couple of hundred pounds at a ludicrous rate of interest .
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"...why would anyone who's not credit impaired borrow a couple of hundred pounds at a ludicrous rate of interest ."
Did you read what I put a previous post, supported by what seem to be reliable references?
Wonga, it seems, WILL REFUSE TO LEND to someone who's credit-impaired, unless their clever algorithm tells them otherwise - and it's a pretty good predictor, since only 7% default.
Wonga doesn't want people to default; it doesn't make money if they do - at least, not without going to a lot of trouble.
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The bit you step over very quickly is the 'don't pay on time' segment. You don't stop to think why people haven't paid on time. You probably think nothing of someone losing their job in the recession & defaulting on their mortgage as a result, but you refuse to accept some people may have become unable to pay through no fault of their own.
It just seems pretty obvious to me that with millions of redundancies dished out in the last five years that many previously solvent people have unexpectedly become unable to pay and left with bad options.
I've never met anyone who's refused to repay a loan on time when they could've easily done so. However I have met people who were forced to take out PPI (probably by people like you) when it was mis-sold for many years who then ended up buckling under CCJ's they should've never got because that magical insurance should've bailed them out.
Edited by jamie745 on 29/07/2013 at 00:30
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Jamie,
Your last post sounds very much like personal experience ,has that formed your opinion .
If that's the case ,then your not going to be able to offer an objective viewpoint are you .
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My personal experience is no less qualified than yours - you said you formed your views from being a finance manager.
Presumably by 'objective' you mean 'agree with me.'
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You can't trust anybody who lends you money they all want their pennies worth back,banks included.If we are not carefull we will lose the plot how to run and live in a soceity.
Gated communities is that the future?
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You can't trust anybody who lends you money they all want their pennies worth back,banks included.If we are not carefull we will lose the plot how to run and live in a soceity.
True, but equally finance has created the modern world. It was the ability of British companies to borrow money that allwoed them to finance overseas expeditions, to finance private armies, and plunder and colonise foreign countries. Where would the modern world be without that?
But seriously, finance is crucial to economic progress.
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Finance has created the modern world. It was the ability of British companies to borrow money that allwoed them to finance overseas expeditions, to finance private armies, and plunder and colonise foreign countries. Where would the modern world be without that?
But seriously, finance is crucial to economic progress.
Yes it is. And since around 2005 the UK in general has borrowed far too much which has inflated asset prices and kept spending at unsustainable perosnal and Government levels. Unfortuantely it has NOT financed the essential assets needed for living: new houses and raods/railways and airports and power stations. And the Government needs to borrow a lot every years or the economyt will collapse - the talk about "austerity" is risible when teh Government is broowing the odd £100billion a year.
So we are busy destroying the currency to reduce the value of our debts.
The financial system has become prostituted to ensure the banks manage to recover - or the entire economy will go mammaries up. It happens every 20-30 years but the last one was the worst.
UK living standrads were only possible due to ever increasing debt.. and that has now virtually stopped.
Wonga and credit unions are like sticking plasters on a broken leg.. They cost a lot, look helpful and leave a bigger mess afterwards.
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Yes we have borrowed far too much and we are still borrowing more, though the aim is to start reducing the debt in a few years. At least it is not increasing at the rate we saw a few years back.
I am sure our living standards are possible without huge debt, or at least close to what we have today.
At the least the Labours have stopped the farce of claiming that the debt is invented by the Tories to allow them to destroy the welfare state.
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