Are quick loans still a valid credit option in 2023?

Video how to get a loan from quick credit

There will always be customer demand for quick and convenient credit options for those rare times when you’re short on cash and facing an emergency that means you need credit quickly. The ‘quick loan’ industry in South Africa has evolved over the years to become a more affordable and viable credit option in many different ways.

However, there are a number of important questions to consider before deciding on what type of credit to access and where you should get it from. We have answered some of the most important questions below to help you make an informed decision.

What are the advantages of using a quick loan?

A quick loan application is typically a simple online process. If you use Wonga, you don’t need to send us any paper documents – you can do the whole application through your smartphone in a few short minutes.

It’s quick

As you might have guessed from the name! An online quick loan is one of the fastest ways to get the credit you urgently need into your bank account as fast as possible. The speed you receive your credit varies between different lenders, and your bank. If you choose credit with Wonga we give you an instant loan decision as soon as you’ve finished your online application. We typically send credit to successful applicants on the same day of your application.

Flexible payment terms

The best quick loan providers will offer you greater flexibility regarding loan length and repayment options. Wonga gives you control of how much you borrow and for how long, you can pay back early with no penalties to help you save on interest payments.

Security and peace of mind

We recommend you ensure your chosen lender is legitimate, reputable and adheres to strict government regulation. This protects you from the risks of the informal ‘mashonisa’ lenders that operate as loan sharks across South Africa.

The safety of Wonga customers is paramount. We’re a global brand operating with responsible lending practices that ensures you’re protected. These practices uphold the security and reliability synonymous with the Wonga name. Wonga is registered with Micro Finance South Africa (MFSA) and the National Credit Regulator (NCR).

Wonga is a direct lender, which means we don’t share your personal information with anyone else. Your details will never leave our secure database and we never sell customer information.

We use the latest secure transfer protocols on our website to keep everything safe and secure. We will never contact you over text or phone to request sensitive information about your loan or Wonga account.

Are quick loans safe to use?

Before you apply for a quick loan it’s wise to research the risks involved with this type of credit. We’ve summarised some of the biggest risks below and explain how Wonga works to help mitigate these risks to our customers.

They can be expensive to repay

Different companies all charge different interest rates and fees for using their service, we recommend you take some time to visit other quick loan websites to gather quotes and ensure you’re getting the best deal. You can then compare these figures with what Wonga offers. To see how much a Wonga quick loan costs simply adjust the sliders on the homepage to choose how much cash and for how long you want to borrow.

Different lenders have different repayment windows

Wherever you choose to access your quick loan, be sure you’re familiar with exactly when you’re expected to repay. There is a temptation to select a very quick repayment window so you only accrue interest on your loan for a few short weeks. This is a good idea in principle provided you are in a position to comfortably repay the loan (plus interest and fees) in such a fast time frame. If you’re over-ambitious and can’t repay within the agreed time you are likely to incur additional late payment fees on top of your interest repayments.

The best quick loans are those which grant you flexibility with your repayment options. Wonga customers have a number of flexible options available to pay their loan back in smaller instalments over several months. Spreading the repayment over a longer period helps customers manage their repayment windows in a more sustainable way and reduces the risk of incurring late fees.

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It’s too easy to get a quick loan

Accessing this type of credit is quick and easy, that is the point. However, be wary of loan providers that are over-eager and especially quick to lend you money without performing an extensive check on your application and credit history. Some lenders will claim that removing these requirements makes the loan application process easier and makes credit more accessible to a wider audience, but this is exactly why these checks and barriers to entry exist in the first place.

Without an in-depth review process, the risk of customers receiving credit that they can’t safely repay becomes much higher. With Wonga loans we have successfully streamlined a review process that is extremely quick but also robust and detailed enough to ensure our customers are receiving safe levels of credit with reduced risk.

Are quick loans still a valid credit option in 2023?

Quick loans and your credit score

There is a significant relationship between credit applications (such as quick loan eligibility) and your credit score. We have answered some of the most common questions below. Additional frequently asked questions about your credit score can be found here: Common credit score questions.

Does applying for a quick loan affect my credit score?

Yes. Applying for any form of quick online loan will have an impact on your credit score to some extent. However, the level of impact can vary significantly based on many factors such as how many applications you have made in the past, how many different lenders you have used and your previous repayment record with these loans.

If you have taken loans in the past and repaid them on time (or early) then the average effect on your credit score should be negligible over a longer period of time.

Does applying for a quick loan trigger a hard inquiry on my credit score?

If you’re using a regulated lender then yes – the loan company will first conduct a ‘soft pull’ of your account. This means the lender contacts a bureau to request your report. A lender can do this without a negative impact on your score as it is only used as a preliminary check by lenders before you have officially applied for credit.

When you formally complete a loan application with your chosen lender they will make an official request for your credit file which is a mandatory and regulated aspect of loan applications in South Africa.

Does being rejected for a quick loan damage your credit score?

Having your loan application rejected does not directly damage your credit score as the lender’s rejection is not reported

and will not appear anywhere on your credit file.

Can a loan boost your credit score?

Technically yes, when you successfully complete a loan by repaying the full amount on time your credit score can increase. The increased score reflects that you were ‘credit worthy’ as you passed a hard enquiry on your credit file and repaid the loan according to the agreed terms.

Your credit score may improve after you complete the loan in full as you are no longer making monthly repayments and are therefore able to make repayments on a future loan more easily. These score improvements indicate you are a trustworthy and lower-risk applicant for future loans.

However, we don’t recommend that you apply for a quick loan just to boost your credit score. You should only apply for a quick loan in a financial emergency (e.g. an unexpected bill) and we don’t recommend using Wonga loans to manage other existing debts.

There are better ways to improve your credit score and the risks associated with online quick loans could lead you to damaging your credit score instead by triggering a hard pull of your credit report or making a late repayment on your loan for example.

What happens to my credit score if I can’t repay a loan?

If you find you’re unable to repay your loan in full and in the agreed time window a default will be listed on your credit score. This is another type of long-term ‘footprint’ that can be damaging to your credit score as it signals to all other lenders who view your credit file that you are high risk as you’ve been unable to honour loan agreements in the past.

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If you have a Wonga loan and you’re unable to repay within the agreed period of time established during your application you will incur additional costs. If you think you won’t be able to repay your loan on time, please contact us. We have options available to customers who are finding difficulty in repaying. We’ll provide the help and advice you need to resolve your situation.

How to boost your chances of getting approved for a quick loan

To improve your chances of loan approval you firstly need to be legally eligible for consideration as a quick loan customer. You must have a South African ID number, be at least eighteen years old, own a bank account and have access to a smartphone or similar device that can connect to the web.

Two of the most common causes of loan rejections are a poor credit history and an inability to provide sufficient evidence that you can comfortably repay the loan amount you’re borrowing. Addressing both areas will increase your chances of getting approved for most types of credit.

You can improve your credit history by reducing the number of ‘hard pulls’ on your credit file. This means not making multiple loan applications to multiple lenders within a short time window. A hard inquiry usually stays on your file for two years.

You should try to reduce your other outstanding credit repayments. If you have a number of overdue loans you may benefit from a debt consolidation loan. This can help to reduce the total amount of money you repay by consolidating administration fees.

Before a lender approves your loan application, they will typically verify your ability to repay by requesting evidence that details your recent payslips, bank statements or other type of regular monthly income. Give as much up to date and accurate information as possible in your application to improve your chances of success.

What alternatives do you have to using a quick loan?

There are many different credit options available to suit your needs. While they are obviously fast and convenient this does not mean that a quick loan is always your best choice. You should carefully consider all of your options before applying for any credit.

Use your overdraft

(Credit card or bank account). An overdraft option on your account will allow you to access credit similar to a loan. The amount you have access to and the fees involved vary greatly between different banks and credit cards so due diligence is recommended to ensure you’re saving the most money.

Consider a personal loan

Most quick loans are aimed at customers who need between R4000 and R8000 which are repaid over a few weeks or sometimes via instalments over a number of months. If you need larger amounts of credit you may be better served with a personal loan that is repaid over several years. This is typically a more effective way of accessing long term credit compared to repeatedly using short-term quick loans.

Ask family and friends for help

This is usually an awkward exchange that people want to avoid with the people closest to them but do not rule out the option just because it can be embarrassing. Depending on the relationship you may find your loved ones are eager to help, especially if it’s a one-off loan that you repay quickly and in good faith.

Speak to your employer

They may be able to offer some form of salary advance to help you access short-term credit without incurring additional admin fees or interest payments. Just be careful to budget and plan ahead accordingly as your next pay cheque will be much lower as the loan is repaid.

Use your emergency fund

This is a nest egg of easily accessible cash you can use for emergencies. This means keeping the money on your person or in a current account that allows you to easily withdraw without any fees. The best time to start building a rainy day fund is when you don’t need to use it.

Get into the habit of shaving off a few hundred Rand every payday to allocate to your emergency fund. We recommend keeping it separate from your other savings so you don’t accidentally use it for something else. You can read our full guide to building your emergency fund here.

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Other Quick loan FAQs

Do loan providers check your credit report?

  • Yes. All regulated lenders in South Africa will conduct a credit check as part of their decision process. They are legally obligated to do so. Wonga’s sophisticated automatic decision process uses this information to ensure we only lend to people who can afford to safely repay a loan based on their previous credit performance.
  • While your credit score is an important part of the decision process there are other important factors that affect your borrowing eligibility. It’s best to be as transparent and detailed as possible during your application to assist the process.

Do quick loan companies contact your employer?

  • It is unlikely that a short-term lender will contact your employer.
  • If you are applying for vast amounts of credit such as a large personal loan or a mortgage application then it’s more likely that a lender will contact your employer to verify your employment status with them. Rest assured that any details you share with a lender during your quick loan application are confidential and can’t be shared with a third party. This is legally protected by the National Credit Regulator.

Do I have to explain why I need the loan?

  • This depends on the lender and the size of loan you are applying for. At Wonga we do not need to know the reason for your loan to approve it. However, it’s common for larger personal loan companies, such as banks, to inquire as to the reason for the loan.

Do quick loans payout on the same day?

  • Usually yes, but this depends on both your lender and your bank. Some lenders do not have the infrastructure and resources to process your application as quickly as others. Wonga has invested heavily in our loan application algorithm to process your application extremely quickly.
  • This means you receive an almost instant decision upon completion of your online application. If you’re approved for the loan the money is in your account on the same day. Keep in mind however that many banks will take longer to update your bank balance to reflect the loaned credit into your account. So while the credit has been sent (and can be used) banks usually need some time to catch up!

Learn More with our Representative Loan Example

Borrowing a loan can be calculated as follows

  • Borrowing R3000 for 30 days:
  • Initiation fee: R419.75
  • Service fees: R69.00
  • Total interest: R168.65
  • Insurance R16.12
  • Total to repay: R3673.52

Loan Renewals

  • Loan renewals and extensions are not available from us. If you want to apply for more credit, you must first repay your current debt in full. Each Wonga loan is a fresh and distinct credit arrangement with its own set of affordability requirements.
  • Returning customers that have repaid their first loan within the agreed terms can take advantage of increased loan amounts (up to R8000) and more flexible repayment terms (up to 6 months in monthly instalment repayments).

Wonga’s Credit Selection Criteria

  • Wonga applies a soft credit check on your account as part of our automated decision-making process.
  • We use strict criteria to ensure we are protecting customers from entering into unsustainable credit agreements that would cause undue financial stress.

Wonga’s Collection Policy

  • We collect repayment via an automatic debit order on the morning of your repayment due date. If the funds are not available in your account this may result in additional charges from your bank
  • Late repayment of your loan will mean extra costs to you and may have a negative effect on your credit rating.

Are payday loans the right choice for you?

  • Wonga loans are only suitable for short term use, they may not be the cheapest credit option available to you.
  • Late repayment of your loan will mean extra costs to you and may have a negative effect on your credit rating.
  • We do not recommend using our loans to manage your existing debt. Learn more about debt management advice here.
  • If you need to take out loans regularly, Wonga may not be the right option for you.
  • You can compare loans online to find the best fit for you.
  • You must be 18 years or older and a South African resident with a bank account to apply for one of our loans. During your application, your credit score will be checked.