One million hard-pressed borrowers prepared to pay interest at up to 5,853% have propelled Wonga.com into the league of Britain’s biggest lenders after the controversial payday loan company lent as much money last year as Britain’s biggest building society advanced in personal loans.
The Archbishop of Canterbury’s promise to “compete Wonga out of existence” has failed to dent the group’s frenetic expansion, it emerged on Tuesday, as Wonga said its profits had leapt by more than a third to £62.5m, with the number of loans granted growing even faster.
During 2012 it handed out nearly four million loans, worth a total of £1.2bn, to one million customers in Britain, matching the amount Nationwide granted in personal loans.
If you hand out £1.2 billion in loans and your total profit is £62.5 million then you’re actual, real, interest rate being charged on your loans, after all costs, is 5.3%.
And here’s the really interesting thing:
Wonga wrote off £96m last year because it deemed the amount uncollectable. That’s £1.85m per week that Wonga is effectively giving away to poor people.