Payday loans aren't your only option. Make sure to compare payday loan alternatives before applying.
A $1,500 loan is also known as a "payday loan" or a short-term loan. These loans feature short loan terms, between 16 days to 1 year. While they are relatively easy to apply for, payday loans are expensive and feature high fees. Given how expensive these loans are, you should only apply in case of a financial emergency. They are not a long-term financial solution.
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It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
For information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor
Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan
If you are on government benefits, ask if you can receive an advance from Centrelink: Phone: 13 17 94
The Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.
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Fees: 20% of loan amount + 4% of loan amount each month
A payday loan is a small loan with short repayment terms. Terms can range from 16 days to 1 year. They're called "payday loans" as you will have to make repayments on your payday.
These loans are relatively easy to apply for, with short online applications and quick turnaround times. Most lenders will get back to you within 60 seconds of applying. Depending on the lender, you may also be able to receive funding within a few hours or on the same day.
As part of this process, you will be required to provide the lender with your online banking details. This is so the lender can access a read-only copy of your bank statements and process the application quickly, often within 60 seconds. This process is encrypted and fairly standard, but if you're uncomfortable with it, you can provide a copy of your bank statements instead.
These loans can be useful if you're hit with an unexpected bill or expense. Since lenders can't legally charge you interest on a $1,500 loan, they charge high fees instead.
How much does a $1,500 loan cost?
Fees are highly regulated by the Australian Securities and Investments Commission (ASIC). For a loan less than $2,000, with terms up to 12 months, lenders cannot charge you more than the following:
An establishment fee of 20% of the loan amount.
A monthly fee of 4% of the loan amount.
If you take out a $1,500 payday loan for 12 months, your costs will be the following:
Loan amount: $1,500
Establishment fee: $300
Total cost of monthly fee: $720
The total cost of the loan will be $2,520, inclusive of fees. Your fees alone come up to $1,020, which is 40% of the loan amount. The fee structure differs for short term loans with higher amounts.
There are also other fees associated with payday loans, which may be applicable. These include the following:
A government fee or charge. This covers government duties, if any. Most lenders don't charge this.
Default fees. This will be charged if you miss a payment or fail to pay. You can be charged up to 200% of what you borrow.
Enforcement expenses. If you default on the loan, you could be charged for enforcement expenses. This is to cover the cost of going to court to recover the money you owe.
What are the pros and cons of a $1,500 loan?
No asset security required. These loans are mostly unsecured and so don't require an asset as loan security.
Flexible loan purpose. You can generally use the funds for any purpose, but you should keep in mind that these loans should only be used in financial emergencies.
Easy applications, quick turnarounds. Applications are online, uncomplicated and quick to complete. Many lenders provide same-day funding.
High fees. Most lenders will charge the highest fees they are allowed to charge.
Penalties for missed payments. You can be charged up to 200% of what you borrow if you miss your repayments or default.
Short repayment terms. With short terms, your monthly repayments will generally be high. You should always ensure the repayments fit comfortably into your budget before applying.
What are the risks of $1,500 loans?
Apart from high fees and short repayment terms, you should also take into account the following:
Inflexible loan terms. Most lenders will ask you to repay the loan on the next payday. They could deduct the funds directly from your account. This could leave you out of pocket if you don't budget for it.
Disreputable lenders. Check the lender's website and make sure it's a reputable company. You should ensure it is registered with ASIC. It should also be easy to contact customer support, in case there is an emergency.
Long-term repercussions and legal issues. Once you sign a loan agreement, you are bound to its conditions. You will have to pay the loan and all the fees and payments. Typically, these are unsecured loans. This means the lender can initiate legal proceedings against you if you do not repay the loan. It can also report the debt to a credit reporting body like Equifax and use the services of a debt collector.
Multiple applications. Every loan application shows up on credit reports. Some short term lenders may not consider your credit history. But several applications within a short period can hurt your credit score. This can make it harder for you to get a loan in the future.
More debt. Given how expensive these loans are, they could potentially lead to more debt if you can't meet your repayments. Late or missed payments could lead to more fees, which has the potential to spiral out of control.
What can I use a $1,500 loan for?
Ideally, you should only take a payday loan for the following:
Unexpected or forgotten bills or payments. If you have no other alternative to cover a forgotten bill, a short term loan may be an option. If you have an urgent utility bill to pay, you should contact your service provider first. It may be able to work out a plan to pay bills or fines in instalments.
Financial emergencies. This can include emergency medical expenses or emergency car repairs.
Unavoidable home repairs or purchases. A short term loan can help if an essential appliance breaks down or urgent repairs are required on your home. If there are alternatives, such as zero interest financing from retailers, you should consider them first.
Unexpected expenses before payday. If you have no other alternative and you're short on funds due to an unexpected expense, a short term loan could help. It's important to remember that this is not a long-term strategy.
Income bridge. If you're waiting on guaranteed funds to come through on a large payment, a short term loan may be an option.
Given how costly these loans are, you should avoid taking them to pay for the following:
Everyday necessities. If this is the case, you should consider a longer-term solution for your credit needs.
Repayments for existing debts. Taking a loan to pay for another loan may make your debt problem worse. You may end up paying more in fees and charges and get into further debt. Payday loans are not a long-term financial solution.
Holidays. Holidays are nice but not always essential, especially if you'll be paying high fees for them.
Big-ticket items like cars. There are other, cheaper options, including secured car loans, that you can access. Keep in mind that with a payday loan, you'll be paying high fees on a depreciating asset.
Other non-essential expenses and purchases that can wait. If you feel like treating yourself to something, you shouldn't take out a payday loan to do it.
How can I compare payday loans?
Comparing loans can help you find a loan product that suits your financial circumstances and allows you to save. Before applying, you should make it a point to read reviews and online testimonials of the lender. You should also avoid applying for multiple loans as this could hurt your credit score and chances of getting credit in the future. When comparing loans, you should watch out for the following:
Rates and fees. You should make note of all fees and charges. This includes additional fees that may be applicable.
Loan term. Loan terms are typically short, ranging from 16 days to 12 months. While short terms mean higher monthly repayments, with longer terms you end up paying monthly fees for longer. All these costs add up and make the loan more expensive. You should also only apply for a loan if you can repay it within the agreed loan term.
Loan amount. Loan amounts for payday loans are usually up to $2,000. How much you're approved for will depend on your income, credit history, the loan amount you've asked for and your ability to repay the loan.
Repayments. Your repayments will be structured around the income you receive. This can be weekly, fortnightly or monthly. Before applying, you should calculate the cost of your repayments. It can help you determine whether it fits into your budget. Some lenders will allow you to repay the loan early. This can help you save on fees and charges.
While most payday lenders charge capped fees, some loan providers assign "personalised rates" to their customers. This is usually a p.a. or "per annum" figure). The interest rate will be based on factors such as your employment, credit history and asset ownership etc. With higher rates and long terms, the loan will cost you more.
For example:
Megan and Phoena both borrow $1,500 from the same payday lender. Megan has several defaults on her credit history, while Phoena has a clean credit history. They are offered the following rates:
Megan: 20% establishment fee and 4% monthly fee.
Phoena: 20.99% p.a.
They are both required to make weekly repayments. Megan opts for a loan term of 1 year, while Phoena opts for a loan term of 60 days. Their repayments will be as follows:
Megan
Weekly payment: $96.92
Establishment fee: $300.00
Total cost of monthly fee: $720.00
Total to be repaid: $2,520.00
Total fees: 1,020
Phoena
Weekly payment: $170.05
Total to be repaid: $1,530.44
Total interest: $30.44
While both Megan and Phoena have borrowed the same amount, the difference in their circumstances and loan terms means that Phoena pays a fraction of what Megan has to pay.
With shorter loan terms, you can pay back the loan sooner and save in the long run, but your repayments will be a lot higher. You can use a personal loan calculator to work out what your repayments will likely be.
*Please note that these repayments are only an example and do not necessarily include any additional establishment costs, monthly fees, etc that might be included in payday loan agreements.
Turnaround. If you need the funds fast, you should consider how long lenders take to deposit the money in your account. Some can issue funds within 30 minutes or a few hours, while others can take longer.
Loan extensions. Some lenders can extend your term by 90 days. This extension will come with extra fees, so you should avoid it if possible. Before signing the agreement, ask the lender the terms and conditions regarding defaults.
Bad credit borrowing options. Depending on your credit history, you will have different options available to you. If you have good credit, you can consider a low-limit credit card, overdraft or small personal loan from a traditional bank or credit union. Bad credit borrowers may be limited to bad credit personal loans, including payday loans. Bad credit borrowers will also usually be required to pay higher interest rates.
Employment or income criteria. Payday lenders are generally more flexible but they have employment and earning-based eligibility criteria. As long as you meet the criteria, you can apply. This includes applicants who are both unemployed and self-employed.
You should always check if you're eligible before submitting an application. You can also contact the lender with any questions you may have.
$1,500 loans for unemployed applicants.
As long as you have some form of eligible income and can prove you can repay the loan, you may still qualify for a $1,500 loan. This can include Centrelink payments or suitable income-earning assets. However, your Centrelink income will have to be less than 50% of your total income. You can read more here.
$1,500 loans for self-employed applicants.
You will have to provide sufficient evidence of your income to qualify. This may include documents such as tax returns, bank statements or proof of rental income, depending on your situation. You can read more here.
You can make interest-free purchases and pay in instalments. Many retailers now offer this option, allowing you to break down your repayments into smaller, more manageable chunks. There are also buy now pay later services that let you pay your bills in instalments.
If you're out of pocket, you could look into pay on demand. This is a type of short-term loan where you can borrow a portion of your pay cheque before your payday. You are technically borrowing your own money in exchange for a small fee. These fees can be from $2 to $10 or up to 5% of the total borrowed money. The idea of these loans is to tide you over until payday.
StepUP personal loan.
If your income is small, you could be eligible for a StepUP personal loan. This program is managed by Good Shepherd Microfinance in partnership with NAB. With this loan, you could borrow between $800 and $3,000, with a loan term of up to 3 years. The interest rate is fixed at 5.99% p.a.
This loan is for low-income earners. It is offered by 170 local community organisations across 600 locations in Australia. You can borrow up to $1,500 to pay for bills and essentials, with terms ranging from 12 to 18 months. As the name implies, no interest is charged. You will only pay for what you borrow.
Centrelink Advance Payment.
This allows you to receive an advance payment on your Centrelink benefits. This is not an additional payment, but a part of your existing allowance paid in advance. You may be eligible depending on how long you have been with Centrelink and how much you receive. There are also other loans you can apply for if you're on Centrelink.
Another alternative is a 0% interest credit card. Keep in mind that after the introductory period, the interest rate reverts to the standard rate. When that happens, you'll be charged interest on the balance you haven't paid off during the 0% p.a. period.
Am I eligible to apply for a $1,500 loan?
The eligibility criteria will differ between lenders, but you'll generally have to meet the following to qualify for a payday loan:
You must be over the age of 18
You must be a citizen or permanent resident of Australia
You must be able to provide identification
You must be able to provide 90 days of banking history
You must earn a regular income, usually at least $350 a week. If you receive income from Centrelink, it cannot be more than 50% of your total income. If you have bad credit, you need to prove your financial situation is stable and that you're able to repay the loan.
What do I need to apply for a $1,500 loan?
Here's what you may need to apply:
Identification. This can include your driver's licence or passport.
Employment and income details. This can include your employer's name and contact information as well as your annual income.
Centrelink details. You may need to disclose the type of payment, how much you receive and how often.
Banking details. At least 90 days of banking history and expenses information is usually required. You may be asked for your Internet banking login details.
How can I apply for a $1,500 loan?
👁 Compare lenders. Look at the fees, terms and eligibility criteria and find a loan that suits you. 🔍 Once you've settled on a lender from the table above, click "Go to site" to visit the lender's website. ✍ You can submit an online application. Keep all the documents required handy. This will speed up the process.
Frequently Asked Questions
Some lenders may consider applicants who are discharged from bankruptcy or are currently bankrupt. You can review the eligibility criteria listed on the lender's website before submitting an application.
There are tight regulations around approving multiple payday loans. While it may be possible, multiple high-cost loans lead to financial problems. Repeated borrowing may also be unsustainable. If you have financial difficulties, payday loans can exacerbate them. Payday loans are not a long-term financial solution. If you're struggling financially, you can get free financial advice.
Don't apply for another loan just yet. Multiple applications can impact your credit score. This can reduce your chances of getting further credit. There could be several reasons why your application was rejected. This could include other defaults and not having enough income or savings. You should wait and work on improving your credit score. The good news is that your credit score gets updated every month. The steps you take to improve it now will pay off in the long run.
This will depend largely on the lender, but there are lenders who consider Centrelink applicants. It's best to check the lender's eligibility criteria before applying. By rule, your Centrelink income has to be less than 50% of your total income. There are also other loan options, such as no and low interest loan schemes, and Centrelink cash advances.
Bria Horne is a writer for Finder, with a specialist knowledge of personal loans, car loans and business loans. Originally from the UK, Bria has been a professional personal finance writer in Australia for over 2 years. She has an M.A and B.A in Philosophy and Literature from the University of Sussex, and previously worked on the UK’s leading hospitality publication.
These lenders won't complete a credit check when people apply for a loan, but there are other eligibility requirements that applicants must meet. Learn more here.
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