Payday loan alternatives

Don’t get caught in a downward debt cycle by relying on payday loans. There are a range of low-cost options available to help you pay for life’s necessities.

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Payday loans might give you access to quick cash but come with expensive interest rates and fees. There are cheaper alternatives that can let you borrow between $300 and $5,000 with interest rates up to 5.99% p.a. with little to no fees. Although each of these alternatives has its own criteria you will need to meet in order to be eligible.

Are you struggling financially?

If you're struggling financially and would like to speak to someone for free financial advice, information and assistance you can call the Financial Counsellors hotline on 1800 007 007 (open from 9:30am to 4pm, Monday to Friday). If you are suffering financial problems related to the coronavirus pandemic you may be eligible for additional support.

⚠️ Warning about Borrowing

payday-warningDo you really need a loan today?*

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.

* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.

Traditional lenders generally will not consider people on a low income or with a poor credit history. If you are in this position, it seems like you're left with little option other than to take out small loans with “payday lenders”, which can be very costly and can strain your budget even further.

Fortunately, there are some alternatives. There are loans available that are designed to help people on low incomes or who can not easily access credit. There are generally no fees and very low interest rates. Many such lenders also help clients develop a financial or savings plan to reduce the need for future borrowing. Here are details of some of the organisations that can help get you back on track:

Pay on demand apps

Pay on demand is a type of short-term loan. With it, you can borrow a portion of your paycheck before your actual payday. It's offered by banks, pay on demand apps such as Beforepay, and services such as InstaPay, which are offered by employers. These services usually don't require a credit check, although banks may require it.

  • Loan amount: This depends on your service provider and can range from $100 to $1,250. How much you can borrow will also depend on how much you earn.
  • Loan term: Less than a month, since repayments will be automatically deducted from your account when you receive your pay.
  • Interest: Most services do not charge interest. However, if your lender is a bank, you may have to pay interest if you don't make your payment in full by the due date. You could be charged as much as 14.90%.
  • Fees: From $2 to $10 dollars. Some service providers may also charge up to 5% of the borrowed amount.
  • Purpose of the loan: To tide you over until payday. You can use it to pay for unexpected expenses, such as minor car repairs, or for everyday expenses like food or transport.

To apply for a pay on demand service, you may be required to earn over a minimum threshold. The criteria will depend on the type of service you're applying for.

For employer-offered services:

  • You must be employed
  • Your employer has to have signed up for the program

For pay on demand apps:

  • You must meet the minimum income requirement, which will differ based on the service provider
  • You may be ineligible if your only income is from Centrelink, if your pay is irregular or if you gamble regularly

For bank-offered services:

  • You must meet the minimum income threshold
  • You must have an account with the bank and your salary should be deposited into this account

Compare pay on demand services

Name Product Minimum loan amount Maximum loan amount Loan term Cost and Fee Details
Beforepay Pay On Demand
up to 4 weeks
5% transaction fee per advance
Borrow up to $1,000 of your wages. Get funding within 60 seconds of approval. A 5% transaction fee applies.

Compare up to 4 providers

StepUP Loan

StepUP Loan is a low-interest option for people on a small income. The program is managed by Good Shepherd Microfinance, and the loans are provided by National Australia Bank (NAB).

  • Loan amount: Between $800 and $3,000.
  • Loan term: Maximum 3 years.
  • Interest rate: Currently a fixed rate of 5.99% p.a.
  • Fees: No monthly fees.
  • Purpose of the loan: Loans can be used for second-hand cars, medical expenses, vocational education, computers or furniture. They cannot be used for debt consolidation, holidays or bills.

To apply for a loan, contact Good Shepherd Microfinance, which will assist with collecting and completing the necessary paperwork. NAB will then assess your application, and if approved, pay the supplier of your chosen goods directly (the money is not paid to you directly).

To be eligible you must:

  • Have a healthcare or pension card, or
  • Receive Family Tax Benefit A, and
  • Have resided in your current premises for more than three months

Good Shepherd Microfinance No Interest Loan Scheme

Good Shepherd Microfinance's No Interest Loan Scheme provides small, interest-free loans to help people on a low income. Loans can be used for vocational training, white goods or medical expenses.

  • Loan amount: Between $300 and $1,200.
  • Loan term: 12-18 months.
  • Interest rate: No interest charged.
  • Fees: No monthly fees.
  • Purpose of the loan: You can use the money to pay for medical expenses, vocational education, computers or furniture. You cannot use it for debt consolidation, bond, rent arrears, holidays or bills.

Loans are provided by over 250 community organisations across Australia. To apply, visit a local provider to complete the paperwork. There is no credit check.

To be eligible you must:

  • Have a healthcare or pension card
  • Earn under $45,000 p.a.
  • Have lived at your current residence for three months
  • Have a willingness and capacity to repay the loan

Pension Loan Scheme

Centrelink has a Pension Loan Scheme which provides a line of credit to people receiving a part pension. It provides fortnightly payments either for a short time or indefinitely. It will pay up to the amount of the maximum Age Pension rate; that is, it will lend the difference between the amount of pension you receive and the maximum rate. Loans must be secured with a property, so you must inform Centrelink if you sell the property. The loan can be repaid at any time or kept indefinitely.

  • Loan amount: Up to maximum Age Pension rate, currently $797.90 per fortnight for singles.
  • Loan term: Can be indefinite.
  • Interest rate: 5.25% p.a. calculated and charged fortnightly.
  • Fees: You are responsible for paying any legal fees that are required to establish the loan. This amount can be added to the loan value.
  • Purpose of the loan: The loan acts like a pension and so can be used for day-to-day living costs or other expenses.

Loans are provided by Centrelink and can be applied for online or at an office. You must meet with a Financial Services Information Officer to discuss the loan before it will be approved.

To be eligible you must:

  • Be of pension age
  • Own or part-own property in Australia to use as security
  • Be ineligible for the full rate of the Age Pension, Bereavement Allowance, Carer Payment, Disability Support Pension, Widow B Pension or Wife Pension as per the asset or income test
  • Meet Age Pension residence requirements

It is possible to receive an advance payment for most Centrelink benefits. Centrelink may give you part of your allowance in a lump sum, which you must later repay. This is useful if you need access to larger sums at fixed periods during the year, rather than receiving a regular income. It can also benefit students who might need lump sums at particular times.

  • Loan amount: This depends on the type of Centrelink payment you are receiving but is limited by the amount you are able to repay within 6 months.
  • Loan term: Most payments must to repaid within 6 months.
  • Interest rate: No interest rate is charged on advance payments.
  • Fees: There are no fees related to receiving an advance payment.
  • Purpose of the loan: You can use the loan for normal living expenses and one-off costs.

You can apply for an advance payment online using the Centrelink app, by phone, by post or at a Centrelink office. You must prove you can repay the money without experiencing financial hardship, so you will require proof of income and details of expenses and liabilities.

To be eligible you must:

  • Be receiving any of the following:
    • Age Pension
    • Carer Payment
    • Disability Support Pension
    • Farm Household Allowance
    • Newstart Allowance
    • Parenting Payment
    • Widow Allowance
    • Widow B Pension
    • Wife Pension
    • Youth Allowance for job seekers
  • Be in Australia when requesting the advance payment
  • Not owe money to the Australian Government


Fairloans is a small lending business that offers a transparent and low-cost product. Loan costs are quoted in dollar values instead of interest rates, so you know exactly how much you are paying right from the start. Loans can be repaid early, in which case the fees will be pro-rata for the time you had the loan.

  • Loan amount: You can borrow $1,000, $2,000, $3,000 or $4,000.
  • Loan term: Loans are for 1 year, but a new loan can be established once the first year is finished.
  • Interest rate: Interest is not charged directly but instead there are loan fees:
    • $1,000 = $199.50 establishment fee
    • $2,000 = $299.25 establishment fee
    • $3,000 = $598.00 establishment and annual fee
    • $4,000 = $798.00 establishment and annual fee
  • Fees: For direct-debit repayments, there is an establishment fee of $2.20 and $0.99 per direct debit.
  • Purpose of the loan: You can use the loan for any worthwhile purpose.

To apply, make an application online. If you are eligible you will be asked to submit documentation to further assess your application. Once this has been received, you should have an answer within 48 hours.

To be eligible you must:

  • Be an Australian citizen or resident
  • Be over 21
  • Have a household annual income of less than $80,000 p.a.
  • Not have more than two credit defaults of up to $1,000

Army Relief Trust Fund

Army Relief Trust Fund provides low-cost loans and hardship payments for serving Army members.

  • Loan amount: Between $300 and $5,000.
  • Loan term: Must be repaid within 2 years.
  • Interest rate: 2% p.a. maintenance fee for general loans, no charge for hardship relief loans.
  • Fees: No service fees.
  • Purpose of the loan: The trust provides loans for any worthwhile purpose, although it prioritises people with greater need or who are experiencing hardship.

Loans can be applied for online, and approval is at the discretion of the Trust. The serving member’s commanding officer or supervisor will be involved in the decision-making process. Repayments are taken directly from the member’s pay.

To be eligible you must have served in the Australian Army for a minimum of 12 months.

There are multiple low-cost alternatives to payday lenders. Most of them will also help borrowers establish a financial plan so they stay debt-free beyond their loan.

AddUP is one such program by Good Shepherd Microfinance, that matches regular savings up to $500, for people you have successfully paid off a No Interest Loan Scheme or StepUP loan.

Compare each of the options to ensure you are eligible and the loan can be used for what you require.

Image: Shutterstock

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4 Responses

    Default Gravatar
    JillyJuly 25, 2017

    Hi there my husband and I are on pensions I am on a carers pension and we need to get out car fixed the gearbox has gone. We need to pay $4000.00 to get the work done so my question is can you help us?

      Avatarfinder Customer Care
      HaroldJuly 26, 2017Staff

      Hi Jilly,

      Thank you for your inquiry.

      If you receive Centrelink payments, including the pension, and are looking for a loan, you may find your options somewhat limited. Lenders have stricter criteria for those receiving the disability support pension (DSP) carer’s pension or the age pension. Nevertheless, please feel free to check our pensioner loans and find out how to apply.

      I hope this information has helped.


    Default Gravatar
    GypsylelJune 26, 2017

    I am on Newstart – have a credit card which is charging a high interest rate. Presently paying $100 per fortnight but balance is hardly declining. I want to pay off the loan so interested in a low interest or no interest loan to pay off the credit card and then get rid of the said credit card

      Default Gravatar
      DanielleJune 27, 2017

      Hi Gypsylel,

      I’m sorry to hear about your credit card. I know how difficult it is sometimes to pay off debt especially when you have to deal with interest.

      We do have low-interest personal loans. Please go to that page and explore your options. Check which one might meet your needs.

      Please make sure that you have read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.

      Also if you can, contact first the lender and discuss your options and chances of approval before you send anything final for your application.

      I hope this helps.


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