UK Finance News

Life has a habit of throwing up the odd nasty financial surprise, be it an unexpected bill, a car breakdown or a forgotten birthday or anniversary present.

Thanks to the advent of instant loans however, there is no longer a reason why these have to be unaffordable.

In the past, people would have turned to a credit card for life’s smaller purchases when money became tight, while a bank loan would have normally been used for larger outgoings such as repair bills or residential deposits. Now though, a new approach to credit is being pioneered – and thankfully for the borrower, they are able to remain in complete control throughout the entire process.

Cash loans are sometimes confused with payday loans, but the reality is that they couldn’t be more different. Payday loans emerged from the ashes of the recession, with customers and responsible lenders alike looking to move away from the lending practises of old to a safer, more considered approach.

Payday loans are linked to a borrower’s pay cheque and involve either post-dated bank cheques or a direct salary reduction. Furthermore, providers of payday loans tend to make little or no effort in assessing a potential customer’s financial suitability or creditworthiness – a trend synonymous with the irresponsible lending that was ultimately responsible for the worst economic crisis in a generation.

Wonga is pioneering a new approach in the UK credit market and responsible lending is right up there on its priority list. The fast loans provider ensures that all applicants undergo stringent identity and credit cheques – this ensures they only take a loan they are able to manage and do not become saddled with unnecessary debt.

Financial experts are in agreement that the golden rule of applying for a loan is making sure that the minimum amount is taken out while still covering your needs and that this amount is paid off in full as quickly as possible. Wonga explains clearly to its customers about the nature of credit and the costs incurred – a refreshing approach given that many standard providers are happy to see loan repayments strung out over a period of weeks and months.

Some lenders also encourage minimum monthly repayments. While this can seem attractive in the first instance because you’ll be paying back paltry amounts each month, the reality is that this builds up over time and a customer will end up paying way over the odds. A Wonga loan, by contrast, has an agreed amount of time over which it has to be paid back in full – ensuring borrowers won’t have to pay any more than they need to.

Wonga’s commitment to responsible lending extends to loan extensions. While traditional lenders may be only too happy to grant these, Wonga won’t be – unless, of course, the customer can prove it is in his or her best interests. Wonga does not promote loan extensions because they can land borrowers in greater financial difficulty – anyone applying for one must pay back a sizable portion of their existing balance before it can be granted.

Financial services secretary Paul Myers said at the turn of the year that the UK’s banking sector needs to become “safe, sound and responsible” – and these three aims are ones that Wonga is also aspiring to. Its principles are based around total transparency, complete control and extreme selectivity – which are likely to be welcomed by both customers and forward-thinking members of the financial services industry.

Once you’ve decided that short term loans are for you, you need to determine how much you wish to borrow. Cash loans up to £400 are available to first-time applicants, and these can be approved for periods of between 1 and 30 days. After applying for a fast loan and being approved, the money is received in the customer’s bank account in a matter of minutes. During the process, the rate of interest is calculated by the provider, and rates stand at one per cent per day for loans lasting up to one month.

Customers can apply for an exact some of money. Whereas traditional lenders ten to offer only set amounts, Wonga will let you choose the amount you require in addition to letting you choose a repayment plan suited to your circumstances. These help to guarantee that borrowers do not pay over the odds – something that is not a given when taking out a bank loan, payday loan or new credit card.

This approach is particularly welcome in the aftermath of recession, with many lenders having effectively been forced to tighten their lending criteria. With many people having been made redundant and many more having accepted pay cuts, there has rarely been such a strong demand for credit, and thankfully Wonga has stepped in with its innovative approach to offer credit solutions to people affected by the recession.

While still a relatively new set up in the credit market, short term loans have already made a big impression. Almost three-quarters (72 per cent) of respondents to a Wonga poll said that, if presented with the opportunity, they would choose fast loans over traditional means of credit. What’s more, customers have been hugely impressed with the method of obtaining cash loans – a whopping 95 per cent of respondents to the same survey said the process had been “easy or very easy”.

Not only does the process take minutes, but applicants benefit from not having to attend a formal meeting with the provider or fill out reams of unnecessary paperwork.

If an unexpected bill has landed on your doormat or your car is beginning to pack up then fear not about the costs you’re likely to incur. A short term loan will afford you access to the exact amount of money you need to cover your back without paying over the odds – so why not see what a cash loan can do for you?