Wonga launches Paylater online installment service
Paylater is a new online payment service from the payday lender, but it doesn't come for free.
Payday lender Wonga is branching out once again, launching an online payment service which could conceivably rival the likes of Paypal.
The new Paylater service allows shoppers to take out a loan to fund their purchase. It’s been launched with furniture retailer Cotswold Company, and sees shoppers given the option of paying for the goods with a 7% upfront fee followed by three equal monthly installments.
So a £100 purchase would result in a £7 one-off charge, followed by three payments of £33.33.
According to news reports over the weekend the new service is still in its early stages and will be initially offered with a small number of retailers, before potentially being rolled out to bigger online shops.
Paypal meets store credit
To me, it looks like the Paylater service is a way of taking traditional store credit online, merging it with a way to pay for online shopping in a similar way to Paypal.
And it spells bad news. As we have repeatedly pointed out, short-term loans are an incredibly expensive way to borrow and should only be used in real emergencies. That does not extend to buying furniture online, or whatever other retailers Wonga is likely to partner with to offer this service.
A 7% fee may not sound like much in the example above, but with bigger and repeated spends, they will soon mount up. If you don’t have the money to pay for the goods in one go, you really need to ask yourself how much you need them and whether you can’t wait a little while to save up.
And if you really do need to rely on credit, try to take advantage of a credit card with a 0% interest period. There are even credit cards aimed at borrowers with poor credit ratings that come with interest-free deals – for example, the Luma credit card will not charge any interest on purchases until February 2013.
More on credit
Why the American Express gift card could be a waste of money
The worst ways to pay for Christmas presents
In-store credit: pros and cons
Credit card options for those with poor credit
Most Recent
Comments
-
Wonga distributed vouchers for strawberries and cream at Wimbledon. I'm surprised it wasn't champagne and strawberries at Westminster. Their interest rates as high as 4000% and they get away with it, because they have powerful investors.
REPORT This comment has been reported. -
Disgusting, these companies prey on the needy. And what a time of year to release it when the needy are even needier. They should be strung up and quartered. I have been there without a job but resisted these extortionate offers. Credit cards are like angels compared to these people. Regulation and stuff, get rid of them before they ruin many more peoples lives.
REPORT This comment has been reported. -
This service has nothing whatsoever in common with Paypal in the breadth of services offered and as an international money transfer organisation. Paypal rates are very reasonable except when associated with Ebay purchases because Ebay getting a 'double bite' of every sale is pretty disgusting. In the USA there is a finance option offered with Paypal, but comparing a multi-billion dollar wordwide operation with the tossers who run Wonga is one hell of a stretch!
REPORT This comment has been reported.
Do you want to comment on this article? You need to be signed in for this feature
17 December 2012