The story surrounding Newcastle United's latest sponsorship deal though is indicative of just where things are going wrong with "wealth creation" - in the UK in this instance, but it could apply in many other countries.
The company sponsor is called Wonga, and has been described as a "legal loan shark company". They lend out money almost instantly on demand. The APR that they charge has been estimated as somewhere between a ghastly 360% to a beyond credibility 4,214%.
The company's (feeble) response to this is that APRs are irrelevant as they only offer short-term loans. So paying 41 Pounds on a loan of 254 Pounds is OK. Short-term.
Really?
So somebody who desperately needed 254 Pounds is going to have to pay back 295 Pounds. And if they were desperate for 254 Pounds in the first place, where are they going to find 295 Pounds? Another loan shark company? And then it becomes 349 and then 397 usw?
If you do not pay Wonga back, they just keep adding on the interest. Short of going bankrupt, where do you end up with them? And if you do go bankrupt, they end up partly owning you! Until you pay back by which point you may well be subject to the 4,124% "that never applies"!
That this is legal I find astonishing. That Wonga is this successful and they get so much custom I not only find astonishing, I find it extremely depressing.
If this had been a company that encouraged savings and growing your income, then they would win my plaudits. As it is they profit massively from the worst aspect there is in any capitalist society - debt culture! On a big scale.
We should be aiming to get low unemployment with all people earning a living wage. We should be aiming for a savings culture where people can live within their means and put summat aside for the future. We should be aiming for sound money culture and an eradication of all debt in all its forms - be it public, private or business.
Instead we end up with greedy nasty loan sharks (actually calling them that is an insult to real sharks!) growing fat upon the misery of others.
This blog is sub-titled "personal thoughts on a world heading down the sink". If you ever wanted an example of the world heading down the sink, this is definitely it!
Update (24/6/2025). Well some good news. Wonga had to take their dubious loan practices into administration in 2020. It would be interesting to know if they tried to pay off their creditors by taking out short-term loans at a rate of over 4,000%!
They don't lend to everybody ;-)
ReplyDeletemaybe not, but the interest rate that they are charging, to whomsoever they do lend the money, is extortionate - even if it were to businesses only (and would legitimate businesses, small or large, not go to a bank first?). German consumer protection laws being what they are I cannot imagine that it would be allowed here.
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