Need a loan at 2334 percent APR?

No, that is not a typo in the headline. British offers small, short term loans online (short term= from 5 to 30 days).  The main advantage they advertise is, that the loan amount is transferred to the bank account of the borrower within minutes of the application, if approved. For that quick service Wonga charges 1% interest per day (!) plus 5.50 GBP transfer fee. According to the website that translates to an typical APR of 2334 percent.

British laws must be very liberal to allow this. In many other European countries interest rates like this would be illegal under consumer protection laws against usury. But Wonga does have a consumer credit licence from the Office of Fair Trading.

And naturally Wonga does not see itself as a loan shark. Read here, why they think their rates are appropriate. I do pity the borrowers that borrow at that interest rate.

EDIT: Interview in the Guardian with Wonga founder Errol Damelin states that Wonga had 50.000 customers during the testing phase.

EDIT Feb. 11th: See the comments for a discussion with John from Wonga.

(Photo credit: Demi-Brooke)

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6 thoughts on “Need a loan at 2334 percent APR?

  1. Hi there. I’d like to make a few points in return if I may?

    Firstly, you suggest that speed is the main advantage of Wonga, which it probably is, but it’s certainly not the only unique benefit we’re offering our customers. We are also super convenient, with the only truly online application and decision process in the UK, plus we’re super flexible and completely transparent.

    Secondly, on APR, as someone involved in the financial world I’m guessing you know that the A stands for annual? It’s therefore a potentially misleading figure to use for a loan that could be as short as five days. APR also assumes compounding interest, which isn’t the case with Wonga. So we also calculate the actual cost of our loans very clearly up front and this total to repay is the information our customers tell us they really appreciate when judging whether our service offers value.

    You won’t find an APR attached to many HUGE bank charges and credit card penalties because they use fixed fees, which are great for avoiding APR calculations (which would dwarf ours in many cases) but not so good for offering your customers transparency and flexibility. It’s true we’re not cheap, but we offer a unique solution for people with urgent short-term cash flow problems.

    Thirdly, you say you pity the people who use our service, yet we have serviced tens of thousands of customers and regularly record world class Net Promoter Scores ( and satisfaction ratings that put the banks to shame. Indeed, 75% of customers tell us that, given the choice, they frequently or always prefer using us over traditional sources of credit such as credit cards and bank loans. So please don’t pity our customers – they love using us!

    Finally, I would like to point out that we are an entirely responsible lender and use the UK’s most sophisticated credit checkig system, referencing hundreds of data points in seconds, to ensure we lend to appropriate people.

    Thanks for letting us respond with some important points and all the best from the UK.

  2. pretty sure you’re leading the witness here… 2334% is the annual percentage rate, and not what would be paid on a 30 day loan. A £100 loan with wonga for 30 days including the £5.50 transmission fee would cost £136.72. Not bad at all for emergency cash with no other borrowing options.

  3. John & Travis,

    thank you for commenting. You both argue that APR is misleading in this case. However Wonga does encourage customers to use the service multiple times:

    “This amount will gradually increase, up to a maximum of £750, if you continue to use Wonga responsibly and repay our trust in you.
    The amount available for you to apply for at any one time will be shown by the cash slider whenever you login – your own unique slider.”
    (Quote from

    Following the example of Travis a customer that uses Wonga six times a year to borrow £100 from Wonga will have to repay £820.32 on the £600 loan amount.

    The cited case that HUGE banks charge high fees and credit card penalities to me does not make the Wonga offer look better; but supports my view that consumer protection in Britain leaves much to be desired.

    I don’t question that customers are satisfied with Wonga’s service; I still pity them for they either have no other more economical choice, or they are not comparing offers.

    And John:
    Is Wonga serious about these comic-style comparisons: ?

  4. Our trust system is actually designed to respond in a very individual and complex way. Our technology considers a lot of factors and in no way encourages multiple loans because ratings can also stay the same or go down, depending on usage. It also considers the current financial status of the customer in question (which is assessed with every application).

    Travis’ example is fair enough, but it’s for a max 30-day loan, our most expensive and not typical by any means. The unique flexibility we offer means the same amount for five days would cost £10.70. It’s not unusual for UK banks to charge £20 per day for going into the red (by any amount) without prior authorisation.

    Anyway, I’ll leave it at that, as it sounds like your mind’s made up and everyone’s entitled to their opinions. Cheers

  5. John, one last reply from me:

    The website does encourage multiple loans. One of the advantages stated is:

    “Improve your credit rating!

    Because we carry out a credit check as part of the application process, you’ll improve your score every time you repay a short term loan from Wonga. That’s because we inform our credit bureau partner of your trustworthy behaviour with each and every cash advance. Just make sure you repay any advances you take on or before the promised date and could find better financial deals become available to you when searching for things like a mortage.”
    (Quote from )

  6. I wonder about the market for this type of service with small business? I know a few small business owners who occassionally need loans for 5 to 10 days to cover the timing of large inventory purchases vs. sales.

    It seems this type of service would be ideal for them. However, the amount’s required for their loans would be much greater than what I imagine typical Wonga loan is for today. Plus I imaging the credit review process would be much complicated for businesses.

    I do like the transparency of the system, and I have to agree that it is much more straightforward than many banks.

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