A payday loan is simply a short term loan that companies such as Wonga offer to people, with the idea that it is to help people out who are perhaps short of money at the end of the month or have something unexpected they need to pay for. One such example they gave was:
“When your mates tell you about finding a deal on plane tickets to the Canary Islands, you've got some options. Maybe you don't have the money to pay for the whole thing now, but you will when you get your wages at the end of the week. Enter, Wonga!"
While this may sound reasonable, what may not be reasonable is the cost of taking out the loan. If a loan of £400 is taken out over a period of 30 days, it will cost £125 in interest and fees. For most students, adding an extra £400 to their student loan would cost £125 over three and a half years or more, a vast difference!
Another complaint about the payday loan companies and the Wonga page in particular, is that nowhere did it mention any of the alternatives offered by universities. If you find yourself in unexpected financial difficulties, please come in and see us at The Advice Place. We can offer emergency small loans for food and travel expenses, or if there is a delay with your funding we may be able to offer a late award loan, which can help cover things like food and rent until your funding comes through. Both these loans are interest free. You can also speak to us about applying to the University’s discretionary fund, which makes awards to students experiencing unexpected financial difficulties.
Don’t feel forced into the pay day loan trap, come and see us!