A new British payday lender making loans at absolutely outrageous interest rates is growing great guns in Europe, according to Forbes.
Wonga does loans at — are you sitting? — 4,000% interest. They use an algorithm to vet high risk borrowers and that predicts who is likely to pay back or not. In fact, they actually turn down 70% of borrowers!
It amazes me that there is a big market, apparently, of people beating down Wonga’s doors to borrow money at 4,000% interest. Wonga is now the biggest small lender in the United Kingdom and they have a goal to spread around the world. (There are no plans to come to America because of what the payday lender says is a “shaky regulatory market” over here.)
What’s the takeaway for you? I want you to think about how we conspire against ourselves with money. The fact that people are beating a path to Wonga is just, well, wrong-a! Those borrowers are either desperate or lazy shoppers. If you borrow at 4,000% interest, whatever crisis you’re in financially is only going to get worse paying that kind of interest.
In our country, some states allow title pawn loans, where you pledge the title of a paid-off vehicle against an ultra-high interest loan. In some states, you could lose your car worth thousands against a loan of a couple hundred bucks if you default. The title pawn operator gets the car, sells it and keeps the money. You get nothing from that sale whatsoever.
So be careful to not let emotions rule when you feel a sudden and strong need for money. Predators will take advantage of you. It’s your responsibility to protect yourself.
