South Africans Unaffected by Wonga Loans Fiasco
August 21, 2018
Used responsibly, payday loans are a quick source of cash when you’re facing a financial emergency. It is essentially a loan that can help you pay for some unexpected expenses before you get your next salary. Having this instant cash can get you out of financial trouble.Wonga loans is one such lender
But what happens when the very people providing the payday loans are in financial difficulties themselves?
It’s Wonga Loans in the Red
Wonga may well be the biggest payday lender in the U. But with them in the red its very existence seems to be under threat.
The lender’s revenues have collapsed, and a couple of years ago they made a loss of nearly £65m. The payday lender has however insisted that they were intending to return to profitability in 2017.
Because Wonga have said that their South African operations are different to that of the UK and elsewhere, it seems that Wonga SA aren’t facing the same financial fiasco woes as in the UK and that they are actually in good shape.
Who is Wonga Loans?
Wonga Loans began in the UK in about 2005. Two South Africans started it – Errol Damelin and Jonty Hurwitz. The name quickly became synonymous with online lending and having money paid into your account in a jiffy. It soon expanded into Canada, Poland, Spain and South Africa. South African operations launched in 2011 with the funding of almost 3 million loans.
Wonga claims that their customers are young professionals who are tech-savvy and who no longer need banks to borrow money. Wonga is somewhat different to other online lenders with their application and approval process taking just minutes.
They were also the first company in the world to fully automate the lending process – there is no paperwork. Their entire service is online, and applicants choose how much cash they want to borrow and for how many days they need it. Up until recently Wonga offered only short term loans for up to a month.
Whopping Cash Injections a Lifeline to Wonga Loans
Developments in the UK don’t impact South African operations. The online micro-lender has actually been rescued from collapse because of a cash injection. The payday loan giant has received a £10 million cash injection to avoid it going into administration. Also, an emergency cash injection of R178 million has also saved Wonga SA from collapse.
British authorities forced the UK firm to also write off South African loans amounting to about R4 billion simply because the lender never checked whether customers could actually afford their payday loans.
Not only that, consumer activists as well as the Church of England accused Wonga of being a legal loan shark, with authorities cracking down on the lender. Both Hurwitz and Damelin left Wonga. However, whatever is going on in the UK, South African operations won’t be affected.
In fact, with these cash injections, Wonga South Africa will continue to operate, and where once they only offered 30 day loans, they are going to be expanding their offerings so that new loans will have terms of up to 6 months.
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All info was correct at time of publishing