I can recapture my youth and get my work done!

The fun with borderline illegal payday loans continues, this time with the British loan service Wonga. They claim that their 4214% APR isn’t representative of anything though, stating the following:

Wonga charges the equivalent of just under 1% interest per day and that rate is applied to the loan amount and transmission fee for the period of the short term loan – usually between one and 31 days. The annual rate of interest is 360%. We know this may be hard to believe, because of the much larger Representative APR we are obliged to display. But that’s because the calculation required by law means that, where a loan is not taken out for a year, the interest rate must be compounded the same number of times the actual loan period would fit into a year. Because an annualised measure is distorting over short periods of time, we always show the total cost of repayment very clearly too.

Take from that what you will, but since I’m just a simple blog monkey, I’m not all too skilled in discerning how much of that is a smokescreen to hide the insanity of a four-figure APR and what actually constitutes sound logic. Anyone savvy enough to break this down is welcomed to do so in the comments. –New Guy Nick

He just needs to make a phone call, give him a sec.