THIS IS WHERE democracy and a free economy really fail. Well actually, more simply when regulation fails, a gaping blindspot for governments. In the shade of the recession caused by lack of regulation either by internal organisations or government, companies like Wonga and QuickQuid have sprung up (I’m sure you’ve noticed) and they advertise nationally predominantly on daytime TV – the unemployed audience. If nothing else they are infamous for their exorbitant interest rates. ‘1999%’ sounds like it should be the punchline to some bankers joke while enjoying an After Eight, but no, it is somehow legal for Wonga and their criminal counterparts to charge these kinds of interest rates despite there having been a government review into loans companies. And they used to be higher!!!
Apparently there is some sort of cap now in that if you borrow £1000 you will never have to pay back more than £2000, or double the initial loan amount. Previously even nominal amounts like £100 loans could grow almost unchecked into several thousands if repayments were not made. But the companies seem to have gotten around this pesky profits pitfall by offering extended credit loans with 1300%+ APR. Obscene.
The legality of all this is still debatable in that it shouldn’t be possible, especially for the targeted people with little income to easily take out a loan that they will frequently struggle to repay. And certainly these legal loan sharks are giving money to people who cannot afford repayments, just like banks were doing while inadvertently ruining RBS etc. with insanely inappropriate mortgages among other things.
These loans companies are profiteering parasites which have largely sprung up like plants after a desert recession-rain, targeting the very people who are least capable of managing their finances with guaranteed monster profits on the back of incredulously high interest rates. That’ll be just another option for debt slavery then…