So inflation is on the increase but what does that mean for you? Think about it for a minute – what do the economists mean when they’re referring to changes in inflation? Let’s take a quick look at what inflation is and how it affects you.
A few facts:
In basic terms inflation is a rise in price in the general level of prices of goods and services in the economy over a period of time.
As the general price level increases, each unit of currency buys less goods and services.
Oddly enough – it really is as simple as that – so the next time economists and politicians complain about high inflation that is all they’re referring to.
It’s the likes of high inflation that see’s many people turning to their credit cards or payday loans in times of need… not always the best choices of finance but a need many of us face on a day-to-day basis.
Want a more detailed explaination on how inflation works? It’s a pretty simple calculation:
Inflation Rate = Consumer Prices Index (CPI) X Retail Prices Index (RPI).
But what is a RPI or CPI?
RPI simply measures the change in the cost of retail goods.
CPI measures the changes in the price level of consumer goods and services purchased by households.
As these levels increase so does inflation… simples!
When I read that Wonga were entering the business loan sector I have to admit I laughed to myself… especially if their business loans work in the same way as a payday loan.
Well I took a look at the website and I was… not surprised. It’s essentially a duplicate of their standard website and they use the same “slider” system they have on their payday loan counterpart.
With a lot of businesses facing another recession and difficulty in obtaining finance the idea behind Wonga business loans is a good one, however, I have a feeling that they should be turned to as a last resort – much like a payday loan. In fact the Financial Times have already said that businesses face yearly APRs of 280%… cheaper than a payday loan but still a bit concerning when you compare it to a standard unsecured loan.
However, I’m not one to go off on an tirade like an angry politician or an ambitious journalist. I believe that there is space for an alternative form of finance for businesses – whether they turn to a Wonga business loan or look to a business cash advance.
Wonga are offering up to £10,000 over a loan period of 10 – 52 days (seems a bit short to me) and is a relatively quick, painless process.
For a small business unable to obtain credit it may be worthwhile checking out their business loan offering… it could mean the difference between business growth and stagnation. If I were in a situation where I needed this type of loan I’d certainly consider it as an option.