Newcastle United has agreed a four-year sponsorship deal with payday lender Wonga. But the club's fans, who do not seem at all pleased by the association with the UK's highest profile payday lender, could end up a good deal worse off if they trust the endorsement of the Wonga logo on the team's shirt and take out a loan.
Just in case you are tempted to borrow from Wonga, Newcastle's new sponsor, here are 10 things it pays to remember:
1. Wonga's interest rate is an eye-watering 4,214% APR. The company argues it charges "just" 1% a day, and that the APR figure is distorted and inappropriate because it assumes the money is borrowed for a whole year while Wonga loans last a maximum of 30 days. But many other payday lenders operate on the same basis and still manage to have lower APRs.
2. Wonga's income rose 269% to £45.8m in 2011. The highest paid director received £635,000. That's a lot of money generated by people paying just 1% a day.
3. Wonga says it lends responsibly, using thousands of bits of data available online to check an applicant is employed and can afford to repay the loan. But the Guardian and Observer has spoken to several borrowers, including some put forward by Wonga itself, who were either living on benefits or whose income has been halved. In response, Wonga's founder Errol Damelin admits they don't always get it right.
4. Other lenders – credit card companies, personal loan and mortgage lenders – may refuse to lend to someone if they see evidence they have borrowed from any payday lender, including Wonga. They regard this type of borrowing as a sign the applicant is struggling financially, and therefore has a high risk of not repaying. Mortgage lender GE Money says it will not lend to applicants who have taken out a payday loan in the past three months, even if they have paid it back on time and without problem.
5. The Office of Fair Trading told Wonga in May it must improve its debt collection practices, and threatened to fine the firm. The warning came after the lender sent letters in 2010 to borrowers who were struggling with repayments suggesting they might be guilty of fraud. In the letter Wonga said it would consider contacting the police if the customers did not act as Wonga requested.
6. Wonga tried to profit from the financial struggles suffered by cash-strapped students by targeting them with information on its website. The company took this down after the Guardian brought it to light, but not before the National Union of Students described the firm as "highly irresponsible" for carrying out what it called "predatory marketing".
7. Wonga boasts about the speed with which it can get money into your account, taking just 15 minutes from application to delivery. But some people who have suffered identity theft and loss of money from their current accounts are wondering whether the speed of its checks and the way loans are set up is to blame.
8. Wonga's marketing style suggests its business is about helping people make fun lifestyle choices ("You've just remembered your wedding anniversary with hours to spare … Don't worry, Wonga it!"). But the Advertising Standards Authority has taken some of Wonga's most cheerful adverts off the air, ruling that the "light-hearted presentation of the ad was likely to mislead about the nature and implications of the product".
9. Stella Creasy, Labour shadow home affairs minister, describes payday lenders as legal loan sharks and has produced a campaign pack available on her website. If you oppose Wonga's sponsorship of the Toon's shirt, you can also join the Red Card for Wonga campaign started by Northampton Town supporter Bob Ward.
10. First step, Wonga sponsorship on the shirt. Second step, the Wonga stadium … Do you really want to risk opening the door, even just a crack?
Source: FOOTYMAD
