Payday lending companies provide short term loans to customers and have been well publicised in recent years, with many critics arguing that the interest rates offered on the loans are too high. Some say that payday lenders are taking advantage of those on low incomes, although this is fiercely denied by the financial institutions.
What are Payday Lenders?
Payday lending companies can provide instant access to much needed funds to those who might not be in a position to gain finance from other institutions. There are always occasions when unexpected bills land on the doorstep and payday lending companies exist for this purpose. The way they work is to provide funds quickly and easily via an online application, with funds often available to withdraw on the same day as the application. The loan is due for repayment on the next payday. These loans are not designed as a long term solution, they are for short term use and should not be rolled over each month. Lenders who get into the habit of rolling their loans over each month, soon find their financial difficulties spiral out of control.
One of the most well-known payday lending companies, Wonga, have amassed over 1 million customers and their success is continuing to grow. Wonga was founded by Errol Damelin, who is an entrepreneur and early stage technology investor. Damelin no longer works as CEO for the company, however, he has helped them become the success story they are today. One of the reasons Wonga stand out more than other payday lenders is as a result of their television advertising campaign, which is light hearted and memorable to most viewers.
Wonga were the first company to make use of automated risk processing technology for the purpose of offering unsecured loans online. With this technology, customers can log on via their laptop, tablet or mobile and make their loan applications quickly. Although lending requirements are not as strict as banks and other financial institutions, Wonga still carry out extensive and responsive credit checks to help ensure lenders can actually afford to pay it back.
Not only are Wonga a household name in the UK, they are also growing in stature in other countries throughout the world. The most recent acquisition for Wonga is Credito Pocket, who are a Spanish payday lending company. They offered similar services to Wonga; helping those with short term financial difficulties gain access to quick funds.
As well as Barcelona, Wonga also have a presence in South Africa, Canada, Poland and Germany. Their German acquisition is BillPay, which allows customers the option to pay up their purchases, while still getting instant access to their purchases.
It looks likely that Wonga will turn up in other countries throughout the world, as they continue to improve and expand their services. One such addition planned by Wonga is offering finance to small businesses. This is likely to be a welcome addition for businesses, as many find it difficult to establish finance elsewhere.