Wonga loans are a product offered Wonga a financial technology (FinTech) company that has been providing South Africans with short term loans since 2011. The FinTech developed a user-friendly automated risk processing technology that speeds up the application and loan calculation process.
As a responsible lender, Wonga uses an instant decision-making software that facilitates credit check before approving a loan application. Despite the credit check, Wonga also considers other factors to approve an application.
Factors like debt to income ratio and your average monthly income also determine the approval of your application.
The whole application process is done online, meaning you can do it paperless at the comfort of your home. Their website homepage is user friendly, with slides that make it easy to set up your desired loan structure.
First step: Decide how much you need and repayment term
On their homepage, move the sliders to determine your desired loan amount and the repayment period. As you set up the loan structure, their system will instantly show all related costs of that particular loan.
Second step: Complete the application form
After clicking the ‘apply now’ button, you will be served with an application form. The form requests you to provide your personal details like name and age (must be above 18 years).
Following are part of the essential fields of the application form:
• Employment details – As a responsible lender, the company will request your employment status to determine eligibility. Not that Wonga only borrows employed applicants, but freelancers and consultants are also welcome.
• Monthly income and expenses – To make a well-informed decision, Wonga will also have to take into consideration your current debt to income ratio.
This helps them to make sure that they don’t advance a loan that will add on to your existing financial strain. In cases where the applicant is paying off a lot of debts or has too many expenses that may hinder loan approval from Wonga, the company may provide necessary advice or refer a client to the nearest debt councillor.
• Banking details – an active South African bank account is needed to deposit your cash advance and for loan repayment instalments.
However, other South African bank accounts may be accepted, even though your loan may take a bit longer to reflect.
Third step: Get your income is verified
Once your loan has been approved, Wonga will then verify your said income. The proof of income documents required will be determined by your employment status.
Meaning the working class provides their respective proof as well as the self-employed and the unemployed status?
• Employed – if you are working full time, part-time or working as a contractor/consultant and earning the same income monthly, then you can upload your most recent payslip.
• Self-employed – As a business owner, sole proprietor or a freelancer, you will have to upload your personal bank statement. Sole proprietors’ business bank statement may be accepted if it bears the applicant’s name.
• Unemployed – This envelopes student, pensioners and unemployed applicants. Since they can’t produce payslips, then Wonga requests any tangible proof that shows that the applicant constantly receives income. The income can be in the form of rental received, private pension or even family allowance.
Fourth and final step: Receive your funds
After your income is verified, Wonga then transfers your cash to your bank account within the same business day.
How much can I apply for?
Wonga offers loan amounts from R500 to R8000. New clients are eligible for loans between R500 to R4000 while already existing Wonga clients can apply for up to R8000 loan amount.
As a short-term lender, Wonga loan terms range from 4 days to 6 months depending on your preference. New clients are limited to a period of up to 3 months while existing clients can take up to 6 months to repay the loan.
Fees and charges
The Wonga loans have a maximum monthly interest rate of 5%. Wonga charges R69 monthly service fee which however is pro-rated for the first 30 days of the loan.
Of course, the service fee charged is a disadvantage as you would not expect to be charged that much by an online lender.
The lender also charges an initiation fee that covers the costs of setting up your Wonga loan. The initiation fee varies with the loan amount, the higher the loan amount the higher the fee charged.
Since their website allows you to see all related charges during the application process, then you will get to know the initiation fee charged for your loan.
Late payment fees may incur if you happen to default payment on a loan payment due date. Wonga does not extend loan terms, however, should you find yourself in such an unfortunate scenario, Wonga may help you come up with a payment plan.
Competitive Advantages of Wonga loans
• Fast – Wonga can fund approved loans within one business day, provided your application is approved before 3 pm on a business day.
• Transparency – there are no hidden fees that you will have to pay during the loan term. All loan related costs are displayed on their homepage and agreed on before you proceed with an application. Unless of course, you fail to repay the loan as per the initial agreement.
• Paying off your loan in time may improve your credit profile since Wonga reports to the credit bureau.
Competitive Disadvantages of Wonga loans
• Wonga charges loan initiation fees and monthly service fees which is something most online loan providers do not do.
• Your credit profile may be affected in the case you default in repayment instalments because of one reason or another.
Even though Wonga charges initiation and monthly service fees, the company is one of the most transparent fintech lenders. Dealing with a transparent lender helps you make a well-informed decision before taking up the loan responsibilities.