Wonga makes changes to their payday loan practices

The largest payday firm operating in the UK, Wonga, has created a new advert campaign. It will be telling consumers about the changes that the company is making to their services. Not only do they promise to not aim their lending practices at the vulnerable, but the lender is also changing the terms as well as interest rates on how they loan money to families. The biggest may be setting a new APR at 1,509%.

First, the ads being created will be featuring hard-working families. They will no longer be targeting the youth, or even children. The firm thinks that by having their ads featuring more working families, such as moms, that those potential customers should be more informed on exactly how the Wonga service works. This should also increase the age of their customer base, which was anywhere from 20 – 35 in the past, to a more older, sophisticated borrower.

Wonga is doing much more than just creating more ads though. They are also changing the core of their lending process. Granted they are doing this for their own selfish reasons, as they have lost over 400,000 customers in a year and they also lost almost £40m in 2014. They are also hoping to put off more Financial Conduct Authority regulations. But the changes will also benefit many families across the UK.

The short term lender is now promising to be more transparent. This is also being shown on their new website. The aim to to offer people flexible access to short term money.

There will also be changes to the terms of the loans. Some of the main ones from Wonga are as follows.

Following the FCA guidelines, there will now be a cap on payday loans, and it will be 0.8%. This is calculated daily though. While that is still a very high rate, it now brings down the APR to 1,509% from 5,853%. This this is a major drop in rates. Other changes being made to Wonga loans are as follows.

• People that apply can now change their minds. Individuals now have up to 24 hours to cancel their application, and they will not be charged. This is a form of a money-back guarantee.
• If a borrower can’t make their payment on time, they will now be given a three day grace period. There will be no additional fees during that delay.
• When applying for a payday loan from Wonga, the applicant will be given information on a worst case situation if they can’t repay the money.
• Any arrears on an account will now be charged interest for only 7 days, which is down from thirty days.

Wonga hopes all of these changes, in particular the cap of 1,509% APR, will reduce the number of complaints which now stands at almost 1,200 in one year. This may also assist the lender while the Financial Conduct Authority continues to review the future of the payday industry. So all this is good news for consumers.