What Caused Wonga & Quick Quid To Fail?

It was only a few years ago when Wonga and Quick Quid were some of the top payday loan providers in the UK.

 (photo credit: INGIMAGE)
(photo credit: INGIMAGE)
 It was only a few years ago when Wonga and Quick Quid were some of the top payday loan providers in the UK. But now both lenders have gone under. It makes you wonder how can two companies become so successful only to see them dwindle down into nothingness.


In 2011, Wonga was having major success. Their profits kept on increasing in size and they quickly became one of the leading lenders. But the reason behind their success is the same reason for their eventual downfall.

Wonga's success was made from having extremely high-interest rates with some of the annual interest rates being as high as 5,000%. The reason they charged so much is that they gave people small loans that are meant to be repaid quickly. Most loans take around a few months to a few years to be fully repaid. But Wonga's loans only lasted for a few days to a few weeks because they only gave out a small amount of cash.

In 2013, regulations were made that limited how high the total interest rate of a loan can be. But some customers couldn't pay back these loans due to the high amount of interest applied to their loans. This resulted in many people and claim management firms filing claims against Wonga which resulted in them losing millions in 2015 and 2016.

With so many claims piling up against Wonga, they had to pay back hundreds of millions of pounds. That sealed their fate and Wonga officially went into administration in 2018.

Quick Quid

Despite the success of Wonga, Quick Quid was the most successful lender in the UK. Following the same concept as Wonga with a short-term loan but a high-interest rate, Quick Quid became the top dog.

But with having interest rates that were as high as being over 1,000%, customers weren't able to pay the loan back. Over 10,000 borrowers made claims against Quick Quid and in the first half of 2019, over 3,000 complaints were filed against them.

Customers claimed they have mis-sold loans which caused them to be stuck in a loan they couldn't payback. With so much controversy surrounding Quick Quid and their business practices, action needed to be taken quickly. The action that took place was creating new regulations. These were the same regulations that took down Wonga and they ended up taking down Quick Quid as well.

Quick Quid had to pay back the compensation claims against them which resulted in a loss of millions for them. Losing all of the money put them in a hole they couldn't dig themselves out of. Quick Quid collapsed into administration in late 2019.

Could This Have Been Voided?

Very much so. Regulators were installed to watch over these two companies to make sure they didn't continue their horrible business practices. But this didn't help. Once it was realized this

solution wasn't working, a new resolution could've been created. Instead, the companies kept on doing what they were previously doing until it finally got so bad, they had to pay back a lot of money and ended up going bankrupt.

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