Wonga - The usual questions no doubt...

paykanti

Apologies if asked before but I did have an extensive look to see if I could find answers to this or not.

The main issue is this:

1) If I ask Wonga to extend my repayment date by a couple of days (the option is available to me on the site), would this look bad/worse on a credit report than if I were to pay it off on the agreed repayment date or would it just be the same?

2) I'm hearing conflicting reports about the effect these loans have on your credit rating.

Martin's article (a little dated) states that they will improve your rating just as with any other type of repayment however, there are plans for the lenders to identify and differentiate between PDLs and other types of loans and in such a case, they may well be to the detriment of your credit rating.

Other threads on here have mixed views from people. From it all, I've come to the conclusion that no one really knows and that it's a grey area as it depends on the lender in question.

Cheers,

sharpy2010

1) It won't make any difference either way.

2) The general consensus is that they aren't great, but no one (other than credit underwriters - and policies vary from company to company) really knows for certain. And they aren't letting on, its business sensitive information.

Daedalus

It would be the same. I am not sure if they count it as two loans for credit rating purposes. I think Wonga ask for the interest before extension, so as to pay off the first loan and start a new one.

Treadmill

Using Wonga certainly affected my ability to get a credit card from my bank first direct, they said in the rejection email that using wonga loans could be a sign that I was in "financial distress" and I am pretty sure that other institutions would have the same attitude.

SeanG79

1) It makes no difference as searches will show the loan was settled and a "new loan" taken out.

2) Pay day loans will have a definite impact on obtaining credit, they are a "warning" to underwriters that you are unable to meet your current financial obligations, thus offering more credit will be at a higher risk

Apples2

paykanti wrote: »

Other threads on here have mixed views from people. From it all, I've come to the conclusion that no one really knows and that it's a grey area as it depends on the lender in question.

It isn't a grey area at all, the problem is people only believing what they WANT to believe.

The clue is in the name, a loan to tide you over until payday.

How clearer does it have to be that when a potential lender looks at your ability to take on more debt you have shown you cannot even contain your current commitments to within your months pay?

This is an unequivocal warning that you are already overcommited and unable to budget adequately.

To give a different perspective...

Lets suppose you have had many many credit agreements, loans, credit cards etc and not repaid a single penny on any of them.
You have a trashed credit file, as bad as credit files go.

You take out a PDL and repay it on time.

This would be a good sign that you have turned a corner and are prepared to repay "something".

It wouldn't change the outcome but better to have a 99% probability of default than 100% default.

ihateyes

First if extending wonga, extend for the sull 31days, then pay back early as you get charged £5.50 for extending.

This country is going to be in a porr place in many years, as going by the money Wonga is making alone, shows many many people are using them.

And when they guarantee money in 15mins 24hrs a day, it is tempting.

Apples2

ihateyes wrote: »

And when they guarantee money in 15mins 24hrs a day, it is tempting.

Not for everyone, sends shivers down my spine the thought of swapping a lot of my money for a little of thiers.

CKhalvashi

Apples2 wrote: »

Not for everyone, sends shivers down my spine the thought of swapping a lot of my money for a little of thiers.

This is my view on it, too.

If the bank won't pay for it, I won't have it (and I haven't asked the bank for any additional borrowing except a CC increase, always paid off on time for about 3 years)

CK