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Mobile Micro Loans Becoming More And More Popular With Young People

Mobile micro loans are becoming more and more popular according to Ferratum one of Europe’s leading lender of microloans. Microloans are loans of small amounts, typically around £100 – £400 borrowed over a short period of time – 10-40 days. According to them the typical customer is aged between 30-32, working, and looking to borrow about £150.

The interest rate is extremely high, around 3113% APR, and really aimed at very short term borrowing, a cash advance for a week or so before pay day is a typical example. £150 borrowed for 7 days with Ferratum will cost you £15 in interest, but the same amount borrowed for 30 days will cost you £49.50 in interest making your total repayable amount £199.50. Previously approved Ferratum customers can simply send a text containing the amount of the load and its duration to apply for a new one, and if approved again the money is transferred without so much as a phonecall.

Heavily advertised Wonga.com is even worse, with an APR equivalent of 4214%, and out £150 load for 7 days will cost £16.24 in interest, and over 30 days £51.51 making the total amount repayable £201.51. The amount of money Wonga has leant via Microloans was around £15million last year alone and has won many ‘Fastest Growing Company’ awards. Much of it’s lending it done via the Wonga iOS Mobile App which allows fast access to the loan calculator to show interest over time, and then the application is also handled through the App with email confirmation if approved.

Have you applied for a Microloan from a Mobile App? Was the experience convenient and would you do it again?

 

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