What is a payday loan provider?
A payday loan provider is a company that lends small (up to £500) and short term ‘payday loans’ to its clientele. Most payday loan providers are small-credit merchants who offer high-interest loans to people in need of some quick cash. While some providers own brick outlets or high street shops, most accept online applications.
In the United Kingdom (UK), payday loans or ‘cash advance loans’ are usually repaid within a duration of 2 weeks or a single pay term. The payday loan provider accepts a portion of the borrower’s next salary as repayment. However, some payday loan providers may offer debt packages that span over a couple of months or pay cycles.
Since payday loan providers charge APRs of 1000% or above along with service fees, payday loans are an expensive and risky option for borrowers. Late repayments, rollovers and defaults can all cause serious financial problems for borrows.
If you are considering obtaining a payday loan, we highly recommend that you check out our list of viable payday loan alternatives that can help you avoid a debt trap.
When did Wonga go into administration?
The FCA announced that Wonga went into administration on August 31, 2018. Access the official press release by visiting https://www.fca.org.uk/news/press-releases/wonga-enters-administration
How does Wonga administration affect me?
Confusion ensued when Wonga collapsed last year in August. If you borrowed from Wonga, here is how the Wonga administration crash you:
- You still have to repay: Wonga has stopped accepting new applications but if you owed it money, prior to the liquidation, you still have to clear your outstanding debt. Wonga made it clear that it going into administration will have no bearing on debt agreements so if you have opted for a payday loan and signed a contract with Wonga, it remains binding and unchanged.
- You may have to pay a new creditor: If Wonga sells your debt to another lender, nothing changes at your end. You still have to clear your outstanding dues along with the charged interest. Contractual terms remain the same. The only difference is that now you are paying a different creditor.
- You might be eligible for compensation: Wonga went into administration because of a slew of compensation claims and irresponsible lending practices. If you were mis-sold a payday loan, you might receive a compensation payout.
Do I qualify for compensation on payday loans?
In order to file a claim for compensation on payday loans, you will have to provide sufficient evidence to prove that your payout provider mis-sold you a cash advance loan. According to the Financial Conduct Authority (FCA) guidelines, payday loans have to be affordable. Therefore, you are eligible for compensation if:
- The payday loan provider did not explain to you all the charges, penalties and additional fees in place when you fill out the loan application.
- You had to repeatedly obtain payday loans from the same payday provider to pay off your initial debt.
- You had to obtain another payday loan from another lender to pay back your existing loan.
- You spent a major portion of your salary on repayment and did not have enough money left for basic provisions such as food and utility bills.
Contact details for Wonga
The Harlequin Building
65 Southwark Street
Contact Number: 0207 138 8330
Email: [email protected]