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Wonga considering expansion into Spain

Source: Financial Times - Thu 24th Jan 2013
Wonga considering expansion into Spain

The Financial Times has reported how the UK's Wonga Payday Loans website is planning to launch in the Spanish market.

The company reported how last year alone more than 3.5m loans - totalling £1bn - were awarded, increasing from 2.5 million loans in 2011.

The Office of Fair Trading reported how the UK market for short-term loans last year stood at £1.9bn.

Wonga's business model makes a decision on the credit-worthiness of an applicant within seconds based on up to 8,000 pieces of data, ranging from traditional credit scores to an applicant's Facebook profile.

The company, which holds zero debt of it's own, has been operating in Canada and South Africa for some time and is considering India and Spain as the most likely growth markets.

The lender, who reject around 60% of all first time applications, reports a 7% default rate in the UK market, however anticipates a 50% default rate when launching into new markets.

In recent months the company has also started offering business loans to UK clients.

Wonga (UK) currently allows private applicants to borrow a maximum of £400 for up to 39 days, with total interest and fees arriving at £160.

The high interest rates prompted the UK's government to announce an ammendment to the financial services bill to allow the financial regulator to impose a limit on the rate of interest applied to short-term loans from 2014.

Comment on this Story

I can understand Wonga in India : its an emerging market, but Spain ? I worry that people are now viewing Spain as a soft target.
Lucinda Castiles - Fri, 25th Jan 2013

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