Skip to main content

Interview with Rick Kelsey, words from Amelia Butterly
Newsbeat reporter

Image source, miscellaneous

Payday loan companies face a group of MPs after criticizing their business practices.

The organizations, including Wonga, QuickQuid and Mr. Lender, are fighting back claims, and their loans make it easier to get into debt.

The Office of Fair Trading (OFT) is also investigating these companies.

There is concern that payday loans may prevent users from obtaining credit in the future, and people are extending loans and borrowing more.

Image source, PA
Image descriptionPayday loan company representatives appeared before MPs

One of the country’s best-known mortgage commentators, Ray Boulger of Advisor John Charcol, told Newsnight that taking out a payday loan could affect any future mortgage offer:

“In our experience, mortgage lenders often turn down applications for those who have received a payday loan – regulators should require payday lenders to report this.”

However, many people take advantage of payday loans without any hassle.

There are no official figures on how many people use this type of borrowing.

The OFT estimates that up to £ 1.8 billion per year can be borrowed from payday lenders.

Newsbeat interviewed Wonga’s Chief Operating Officer Niall Wass and asked him a few questions from an audience.

Luke from Prestatyn asked, “How can Wonga get away with stalking you? If I called you every day, you’d get a restraining order.”

Niall Wass said, “What exactly are we getting away with? The average loan is £ 180 for 17 days. People pay £ 36 in interest and fees for it.

“It’s very clear and transparent and if you don’t pay back you will be charged a standard fee and we will contact you to say, ‘Hey, do you have a problem?’

“If we bomb, we shouldn’t do that. I will definitely check this out.

“We send a text message and an email beforehand to remind people that they promised to pay us on a certain date and that they are in some way living up to their commitment.”

Beth of Doncaster asked, “How do you feel when a woman takes out a £ 300 payday loan at Wonga, lies by saying she works and is now complaining because she owes £ 2,000?”

Niall Wass said, “We have to be responsible and do all we can to ensure that people can do two things: they can afford to repay us, and they intend to repay us.

“Obviously, when people lie to us, it makes our job quite difficult, so we ask the people on the other side to be responsible about it too.

“The vast majority of people are telling the truth, and even if they don’t, we use 8,000 pieces of data to review every single application, so it’s very, very difficult.

“We turn down eight out of ten first-time borrowers, so we’re very, very careful who we loan out to.

“The vast majority of our customers pay back on time. Less than seven percent of people don’t.”

Denver, Kent, asked, “Are you going to post notices in stores warning people that taking out a Wonga loan will seriously affect your chances of getting a mortgage?”

Niall Wass said: “We are not particularly concerned about this because we don’t come across it regularly.

“In fact, they don’t tell us this is a particular problem when we talk to the two largest credit bureaus in the UK.”

follow @BBCNewsbeat on twitter




Source link

Leave a Reply