As if having to see payday loan adverts on Red or Black? wasn’t bad enough, now Wonga is considering a foray into the mortgage lending market sometime in the future.
The much-reviled payday advance lender, notorious for charging upwards of 4,200 per cent on its short term loans, has already branched out into business lending after reaching market saturation with the payday lending sector. Now, the firm is considering a move into ‘modern financial services’ such as savings accounts and – yes, you guessed it – home loans.
There’s no dearth of detractors when it comes to the payday lender’s practices, which have been called exploitative by taking advantage of a lack of traditional forms of credit. However, Errol Damelin, founder and chief executive of the lender, says that his company provides crucial access to credit for those who would otherwise be left without any options.
Of course, anyone who makes it a habit to take out payday loans on a regular basis in order to make ends meet will certainly run out of options as well. Interest rates on these loans are so high that it’s simply unsustainable to keep the practice up indefinitely – and if you miss a payment, watch out: if you thought payday lending was expensive before, wait until you’re hit with eye watering late charges and rollover fees.
The only good news is that any such entry into the mortgage lending market is most likely rather far off for the moment. There’s a lot of planning and organisational tasks that go into providing such a long-term, high-value service, and Wonga has a long road ahead of it; let’s just hope that the bridge is out.