We can understand confusion over the large Representative APR number we are obliged to display, so here we sort fact from fiction...
We don't actually charge thousands of percent in interest 
In fact we don't charge anything like the large Representative APR
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.- It is impossible to borrow money from Wonga for a year
We do not offer long term loans and an annual product simply doesn't exist
Even if we were to launch a year-long loan at the same interest rate we charge now, the APR would be much lower than the current figure, more like 360%, because there would be no artificial compounding involved.- There is a simple reason why the Representative APR is so big
APR was designed to compare the cost of loans or card balances of several years
For a Wonga loan of a few days or weeks, the equation not only multiplies the actual period of interest up to a year's duration, but also compounds it, assuming interest-on-interest many times over. The result is a grossly distorted number that bears no relation to the actual interest involved. An influential PWC report, UK Consumer Credit in the Eye of the Storm, said: "Annualising the interest cost of a product that is only offered as a short-term facility confuses the purpose of the loan and misrepresents the true cost."- The full cost of repayment is important when considering a short term loan
As the length and cost of a Wonga loan decreases, the APR actually goes up!
We provide more flexible and even shorter term loans than most other short term lenders and that is why our Representative APR is a bigger number, despite the actual cost often being lower. The best thing to do is always check the full cost of repayment when considering any type of credit, especially short term loans, where APR distorts the actual interest charged.
Why not have a play with our sliders to see the real cost of Wonga's service -
