PLEASE NOTE:

MyNews24 is a user-generated section of News24.com. The stories here come from users.

 
Kyle Mitchell
 
Comments: 8
Article views: 804
 
 
 

The scary truth about payday loan companies

08 May 2014, 08:38

I know the trend lately has been revolving around elections and fairy tales, but I am going to diverge. Some of these people will think the Dawkins spaghetti monster is real (sarcastic), and there is nothing we can do about it. Anyway... 

As I mentioned in my article the other day, I recently started work for a company in the UK that handles PPI Claims

While I am busy learning the ins and outs of the packages that the business offers, I have learned some scary truths about Wonga and other payday loan companies (Wonga was started by a South African in the UK). I would just like to run through the kind of debt that many people are exposing themself to while these companies run around (un)regulated. For an example, if we start with a relatively low amount, let’s say R200, the loan can soon start to look like this:

R200 from a payday lender (which is seldom the case, as people will no doubt be irresponsible with this. If you were flat broke, be honest, what would you take?).

This needs to be repaid in 30 days together with the R90 interest (which is equivalent to 1.5% interest each day!).

So now R290 needs to be paid back. Pretty simple concept. The problem is however, if for whatever reason the loan is forfeited, they let you roll up the amount. So now you have effectively taken out a loan at R290, with the total now to be paid back in the region of R420. In the space of 60 days (the amount to be paid back is more than double what it initially was).

If you have a look at the type of target market that Wonga is targeting in South Africa, you could comfortably say that it is the low income bracket (A lot of the ads are also on free channels like SABC). Now let’s say you are a domestic worker (Which is a large number of people in South Africa), you are probably earning around R2500 per month. If you take out a loan of R1000 for whatever reason, you could well be paying around R1800 in one lump sum in this scenario (This is effectively extortion and loan sharking). Combined with this, if you are in a position that this happens, you are more than likely poorly educated, and don’t know the eventual ramifications and how this could cripple you financially (You were presented with a grandpa telling you how to get R2000). This then forces you to take another loan to cover this, which repeats the initial problem.

The UK government is putting a lot of pressure on these companies, with numerous towns making the stores illegal and blocking the IP Addresses in public areas. New legislation is in place that allows people to claim this back, paying back just the loan and initial interest. While we have a bunch of morons in charge who are probably getting their palms greased for agreeing to the exploitation of their citizens, surely there needs to be a way around stopping this from happening to South Africans? I don’t mean to harp on about these things, it is just so scary that institutions are getting away with things in SA that is considered serious misconduct and even fraud on this side of the world. I am in no way clued about the law, but is there a Financial Ombudsman that we can write to in order to have this properly regulated? In this of all weeks, surely we can’t sit back and watch fellow South Africans get ruined for something they don’t quite understand?

Disclaimer: All articles and letters published on MyNews24 have been independently written by members of News24's community. The views of users published on News24 are therefore their own and do not necessarily represent the views of News24. News24 editors also reserve the right to edit or delete any and all comments received.
 

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
8 comments
Add your comment
Comment 0 characters remaining

Read more from our Users

Complaints and more complaints

The Mr & Mrs Know it all seem to have a problem with amount of complaints from the Republic regarding the state of the state.  Read more...

0 comments 20 views
Submitted by
Mauritz Venter
The reason why God will never mak...

News24, it seems, became a battle ground between atheists and Christians. For better or worse, I don’t know. Read more...

4 comments 16 views
Submitted by
Atheitis
Trying to convince the god sodden...

On Wednesday 20th August, 2014, while spending a trying day on a golf course, a person who identifies himself/herself as Lyndah Dube posted the following comment... Read more...

0 comments 14 views
Submitted by
Onela Dyasi
The Mining Strike: Amcu is set to...

2014 has not been a good year for mines owned by Anglo American Platinum (Amplats). Read more...

0 comments 14 views
Submitted by
Martin Frank Marriott
Scientology - The new SCIENCE

All the debating between Creationism vs. Science. Now I give you the third factor, Scientology or Science v 2.0.  Read more...

41 comments 810 views
Submitted by
Ryan_Ruffgrain
The Premier League Weekend Previe...

Chelsea play host to Premier League newcomers, Leicester on Saturday afternoon, followed by Everton taking on Arsenal at Goodison Park.  Read more...

2 comments 160 views

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Magical Massinga

Spend 5 nights at the gorgeous Massinga Beach Lodge in Mozambique and only pay for 4 from R13 220 per person sharing. Includes return flights, accommodation, transfers and romantic turndown. Book now!

Kalahari.com - shop online today

Save up to 30% off top fragrances

Get mind blowing savings on selected fragrances. Offer valid while stocks last. Shop now!

Up to 40% off fashion accessories

Save up to 40% on selected handbags, purses, watches, jewellery and more. Offer valid while stocks last. Shop now!

Save up to R2000 on top electronics

Get every day mind bowing savings on top electronics. Offer valid while stocks last. Shop now!

Save up to 50% on Women’s month treats!

Celebrate the awesome women in your life with awesome treats like beauty products, fashion accessories, bestselling books, electronics and more. Offer valid while stocks last. Shop now!

Up to 60% off - clearance sale!

Save up to 60% on appliances, books, electronics, toys, movies and more. Offer valid while stocks last. Shop now!

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

 

services

E-mail Alerts The latest headlines in your inbox

RSS feeds News delivered really simply.

Mobile News24 on your mobile or PDA

E-mail Newsletters You choose what you want

News24 on your iPhone Get News24 headlines on your iPhone.

SMS Alerts Get breaking news stories via SMS.

Blogs Your opinion on you, me and everyone.

Calais Website keywords automated by OpenCalais.

 
Interactive Advertising Bureau
 
© 2014 24.com. All rights reserved.
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.








Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.