A Guide to Wonga

• Money can be transferred within 15 minutes
• Borrow up to £400
• Loan terms last between one day and one month
• There is no paperwork to complete
• Money is collected in a single payment from a debit card
• Interest continues to mount up if you miss a payment
• Your account may be passed on to a debt collector if you fail to pay

How does it work?

If you need a payday loan or credit on a short-term basis then you may find a site such as Wonga.com useful. The company offers loans of up to £400, although this may be increased if you become a 'trusted user' of the site. There is no paperwork involved and, if approved, the money can be in your account within 15 minutes. You will be asked for your personal details and a credit search will be performed in your name.

A short-term solution

Interest on loans of this type tends to be much higher than on traditional loans and credit cards. This type of borrowing should only be used on a short term basis. With Wonga.com, money must be paid back in one lump sum from a debit card. You should only take out a loan if you are able to pay it back in full on your next pay day. Avoid borrowing more than you need.

Trust rating

Wonga.com operates a trust rating system, which determines how much money you are able to borrow. The first time you use the service you will be offered a maximum loan of £400. However, if you use Wonga responsibly and pay back your loans on time, this can be increased to up to £1,000. Once you have set up an account with Wonga you will be shown how much credit is available to you every time you log in.

Failing to pay back your loan

A quick loan can turn into a massive problem if you fail to stick to the terms agreed with the lender and fail to pay back the money on time or in full. If Wonga attempt to claim a payment from your debit card and it is declined, you may incur a £20 missed payment charge. If further attempts to reclaim money fail, your details will be passed on to Wonga's professional collections team. Bear in mind that while this is happening, interest on your loan will continue to accrue. Continued failure to repay will result in your details being passed on to an external debt collection partner and could have a negative impact on your credit rating. It is also unlikely that you would be able to borrow from Wonga again.

Alternatives

There are alternatives for those in need of money on a short-term basis. If you own any games consoles or valuable electrical goods then you could consider trading these in or selling them on a site such as Gumtree. Alternatively, you could take your jewellery to a pawnbroker and secure a loan in this way. Many pawnbroking agreements last for up to six months. Failure to pay back the loan will result in you losing the goods that you secured it against. However, your credit score will not be affected and you will not have debt collectors knocking on your door.

Further sources of information

To learn more visit Wonga.com. If you think a pawnbroker may be a better solution then check out H&T Pawnbrokers. You can also read more finance guides by visiting UK Net Guide.