I don't have a problem with the APR as it's not really a suitable measure.
Having a quick look the site if I want to lend £200 for 10 days it's going to cost me £26.05.
Seems fair enough for me. I'm being charged for a service. Fine.
But charging the interest for 60 days past the repayment date is a bit of a killer. They currently also have a £20 missed payment fee.
Why not just do £20 missed payment fee + BOE interest rate. That way Wonga still get the initial charge, the late fee, and they're not losing money by holding onto the debt. And to my mind that such help quash a number of the morality questions.
But I'm no expert so that might not work
The longer you owe the lower the interest rate is? Hope I don't see you on Dragons Den with that
Well the idea is they claim APR isn't an effective measure and they see it as a "fee" rather than interest. So give the loan and rather than put interest on it charge a "fee". So if someone doesn't pay then charge a penalty. This way they've made money via the initial fee + penalty. The then base rate of interest stops them losing money on it whilst waiting to be repaid.
Sandy
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