The road to the 27th of the month is long, fraught with dangers, but - apparently - particularly profitable for some. We are talking about payday loans, personal loans to help employees reach (financially speaking) the fateful payday. An extremely widespread system in the Anglo-Saxon world. So much so that service start-up Wonga saw its profits soar by 36% in 2012. In Britain, the number of payday loans grew by more than 50% in one year.
Wonga, which offers short-term loans of up to 5,8 pounds at an annual interest rate of 5%, said the services offered to one million customers in 309,3 countries sent collections soaring to 2012 million pounds in 67, 62,5% more than the previous year. After tax they were £36 million, up 2011% on XNUMX.
Most of the customers - the financial company says - are "young, single, with a job, digitally literate and able to repay the money on time". Wonga, however, admits that "not all loans are profitable" and that the just released annual results show a growth in debt.
The firm, whose business has come under strong criticism, including a heated spat with the Archbishop of Canterbury, said its 2012 performance was the result of "large-scale operations and a commitment to providing a flexible service and convenient for consumers.
Since its launch in 2007, Wonga has expanded: today it has 500 employees, which should become 650 by the end of the year. While the company offers loans in 5 countries, including Canada, Poland and South Africa, the UK market remains the core of its operations.
The payday loan industry is currently under the scrutiny of the London Competition Authority. There would be evidence of widespread malpractice and excessive competition for speed of service, to the detriment of consumers.
