Wonga Jargon Buster: M-Q

Mortgage

A type of secured loan used to help you buy property. The loan period is often 25 years or more and the lender has certain rights, including the right to take possession and sell the property if you don't pay back the loan in line with an agreement.

Net

The amount of something after all deductions, such as tax or fees, have been subtracted from the gross amount. Your net pay, for example, is the amount of cash you receive after all tax and other deductions have been removed.

Net interest rate

Net interest rate is the rate of interest payable after the deduction of UK income tax at the rate specified by law (currently 20.00%). The rate of tax may vary depending on the circumstances, such as the income of an individual, so a net rate is usually only given as an example.

Nominal annual rate

The rate of interest that would apply if the interest were not added each year and if there were no inflation.

OFT

The Office of Fair Trading (OFT) is a non-ministerial government department that was established by statute in 1973. It is responsible for making markets work well for consumers by promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive. Wonga and other lenders providing unsecured loans are regulated by the OFT.

Online banking

Online banking, also called e-banking or internet banking, refers to banking services which are offered via the web. You can check your balance, order a new chequebook or set up a cash transfer for example.

Online payday loans

Payday loans which are applied for over the internet. In reality, very few companies can offer a truly online service and many require the applicant to fax documents or speak to someone in a call centre. Wonga is not a payday loan, but it is the UK’s only truly online loan service – with no faxing, postage or phone calls required. 

Outstanding balance

This refers to the amount of borrowed money that you still need to pay back to the lender. Your outstanding balance normally reduces as you make payments against your loan, except in the case of interest-only mortgages.

Overdraft

A bank facility enabling a customer to borrow an agreed amount (sometimes for an agreed time) against their account. Agreed overdrafts can be a very cost-effective way to borrow money for a short period of time, but unauthorised overdrafts of any amount often result in very large penalty fees, for which banks have come under heavy criticism in recent times.

Overpayment

Making regular credit repayments for more than you are actually required to, or occasional ‘lump sum’ payments. Overpayments, where permitted, are normally made in order to settle a loan or mortgage earlier than predicted. Many loans and mortgages don’t permit overpayment, however, as this reduces the amount of interest the lender will ultimately collect.

p.a.

This stands for per annum, meaning each year.

Payday advance

This is another term to describe a payday loan (see below).

Payday loan

A payday loan (also called a paycheck advance or payday advance) is a short term loan that’s intended to cover a borrower's expenses until his or her next payday. The lender usually charges a fixed fee per £100 borrowed and the loan is made until your next payday, regardless of when you apply. Payday loans often help people who can’t get credit elsewhere and have a reputation for encouraging customers to roll their loan from month to month. Used sensibly they can be a viable credit option for some. 

Penalty charges

Penalty charges are a type of fee charged for breaking the terms of your banking or borrowing agreements. They can be incurred for things like unauthorised overdrafts, bounced cheques or failed standing orders.

Personal loan

Personal loans are offered by banks and other lenders to individuals for their personal use, such as to buy a car or pay for a holiday. Repayment periods typically vary from one year to five years, although Wonga offers a type of personal loan which can be taken for as little as one day.

PIN

PIN stands for personal identification number, which is a four-digit number that you enter into a cash machine or card terminal when you want to access you account or complete a purchase. For security, you should never give your PIN to anyone or write it down.

Promise date

This is the date that you say you will certainly repay your loan.