Wonga loans are a service provided by Wonga, a financial technology (FinTech) firm that has been providing short-term loans to South Africans since 2011. The FinTech company created an easy-to-use automated risk processing system that speeds up the application and loan calculation procedure. Wonga, as a responsible lender, employs real-time decision-making tools to expedite credit checks prior to processing a loan application. Despite the credit check, Wonga takes into account a variety of other aspects when deciding whether or not to approve an application.
The approval of your application is also determined by factors such as your debt-to-income ratio and your average monthly income.
The entire application procedure is completed online, allowing you to do it in the privacy of your own home. Their homepage is user-friendly, with slides that make it simple to set up the loan arrangement you want.
1. 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.
2. 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.
3. Get your income is verified
Wonga will check your income after your loan has been granted. Your employment status will determine the proof of income documentation necessary. That is, the working class, as well as the self-employed and unemployed, present their respective proof?
• 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.
4. 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 provides loans ranging in size from R500 to R8000. New clients can apply for loans ranging from R500 to R4000, while existing Wonga customers can apply for loans up to R8000.
Wonga’s loan lengths, as a short-term lender, span from 4 days to 6 months, depending on your needs. New clients can only borrow for up to three months, while current clients can borrow for up to six months.
Fees and charges
The monthly interest rate on Wonga loans is capped at 5%. Wonga levies a monthly service fee of R69, which is pro-rated for the first 30 days of the loan. Of course, the service fee is a drawback because you would not expect an online lender to charge so much. An initiation fee is also charged by the lender to cover the costs of putting up your Wonga loan. The initiation fee is proportional to the loan amount; the larger the loan, the greater the price. You will learn about the initiation fee levied for your loan because their website allows you to see all relevant charges during the application procedure.
If you miss a loan payment deadline, you may be charged a late payment fee. Wonga does not prolong loan terms, however if you find yourself in this terrible situation, Wonga may be able to assist you in coming 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.
Wonga is one among the most open fintech lenders, while charging start and monthly service fees. Dealing with an open lender allows you to make an informed decision before taking on the loan obligations.