Compare Payday Loans, Credit for the real world, Wonga

Before applying, it’s essential that you know how to compare payday loans and work out which lender is right for you. Doing a decent comparison involves more than just looking at the APR figure on their homepage. You also need to think about less evident things that may affect the amount you will eventually pay. For example:

  • Will the lender permit you to borrow exactly how much you want or will they only permit you to borrow in increments of, for example, £50?
  • What will happen if things go wrong and you don’t pay back on time?
  • Does the lender charge any fees that are not instantaneously apparent?

Before you embark, work out exactly what loan you need and then work through what the costs will be for the different lenders you’re considering.

Before you commence comparing, you need to know:

  • How much you want to borrow
  • How long you want to borrow for
  • The interest rate and APR
  • Any fees

How much you want to borrow

Be wary of any lender who doesn’t permit you to choose exactly how much you want to borrow. You’ll be charged more interest if you borrow more than you need. Many payday lenders, including Wonga, permit you to borrow in increments of £1. While you can borrow any amount over £50 from Wonga, some lenders force you to borrow at least £100.

How long you borrow for

Again, be careful if your proposed lender does not permit you to borrow for exactly the amount of time you want. If you are coerced to borrow up to your next payday for example, you may end up paying more. The less time you borrow for, the less you’ll pay in interest. Many payday lenders, including Wonga, suggest loans that let you set exactly how long you want to borrow for, usually up to around 35 days. It’s significant to choose the loan term that best suits your individual circumstances.

Check that once you’ve taken out the loan you can repay at any time before your repayment date. Some payday lenders, including Wonga, let you back early so, if your circumstances switch, you can save interest on the days you don’t need the loan.

Be sure to choose a payday loan with clear repayment dates, agreed upfront, so if you pay back on time you’ll know when your debt will be cleared.

The interest rate and APR

Payday loan advertising must include an APR (Annual Percentage Rate). This is a standardised, legal calculation designed to help you compare the cost of different types of loans. How APR works, however, is not straightforward. APR is impacted by your loan amount, term and fees. Different customers with different sizes and lengths of loans will pay different APRs. The advertised ‘Representative APR’ applies to 51% or more accepted customers but may not be what you pay.

For this reason, it’s significant to look at other considerations such as fees or what happens when you go into arrears, as this may affect the total cost of credit. Use our loan calculator to see for yourself – we always showcase you the total cost of credit up front.

It is unusual for payday lenders to charge arrangement fees but it’s good practice to check there are no hidden fees before you apply for a loan.

If you repay your payday loan late it is likely you will be charged extra costs. Different lenders charge different fees, but they usually include a missed payment fee and extra interest charged on the amount you owe. Some lenders, including Wonga, permit a grace period before the missed payment fee is charged. Wonga give you a grace period of Trio days. Most lenders also cap the number of days you will be charged extra interest after you default. Wonga’s payday loans stop incurring extra interest 30 days after your missed payment date.

Wonga charges no fees (other than for missed payments) so our total cost of credit is the same as the interest paid (if you repay on time).

Total cost of your loan

In summary, before committing to your loan, make sure you understand the total cost. This will tell you if you’re getting the best deal and whether you can cosily repay the loan.

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