Bad credit payday loans
Compare the eligibility requirements, costs and loan options for people with a bad credit score.
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Do 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:
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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.
What's in this guide?
- What is a bad credit payday loan?
- A selection of bad credit payday loans
- More bad credit payday loan comparisons
- Can people with bad credit get a payday loan?
- Are there any guaranteed loans for bad credit?
- How can I improve my chances of getting approved for a bad credit payday loan?
- The features of a payday loan
- How much does a payday loan cost?
- Why do bad credit payday loans cost so much?
- Can I get a low interest bad credit payday loan?
- What can bad credit payday loans be used for?
- How to compare payday lenders
- Pros and cons of payday loans
- What Happens If I Miss A Payment?
- How long does it take to get a bad credit payday loan?
- How to apply for a payday loan
What is a bad credit payday loan?
A bad credit payday loan is a payday loan that either specialises in, or offers, loans to borrowers with bad credit histories. While most payday lenders do lend to bad credit borrowers, this is not necessarily the case for all. A bad credit payday loan is a small, short term loan that's usually for less than $2,000, but can be as much as $5,000 or even $10,000.
Bad credit payday loans have short loan terms, and borrowers usually must make regular repayments according to the frequency of their pay (for example, monthly). Depending on the loan, the term may be as short as 16 to 60 days, but some may have terms as long as 1 or 2 years.
A selection of bad credit payday loans
Sunshine Short Term Loans
- Loan Amount: $2,000
- Loan Term: 9-14 weeks
- Turnaround Time: 30 minutes - conditions apply
- Fees: 20% of loan amount + 4% of loan amount each month
- Bad credit borrowers OK
- Quick & easy Approval
- Borrow up to $4,584
- Loan term up to 1 years
- Instant online decision
100% confidential application
Swoosh Finance offer fast, reliable, and hassle-free secured loans up to $4,584 for when you are in need of money.
- Loan amount: $4,584
- Loan term: 60 days -12 months
- Turnaround time: Next business day
- Fees: $416 + 47% p.a. of borrowed amount
More bad credit payday loan comparisons
Sort through the table below to find out how much you might be able to borrow.
|Loan name||Loan features|
|Swoosh Finance Loan||Borrow up to $4,584 with a short term loan from Swoosh.|
|Sunshine Short Term Loans||You could borrow up to $2,000 without a credit check.|
|Nimble Short Term Loan||Apply online for up to $2,000 with the Nimble flexible loan.|
|Cash Train Loans||Cash Train offers a loan up to $2,000 for bad credit borrowers.|
|Ferratum Cash Loans||Get a loan for up to $1,900 without a credit check.|
Can people with bad credit get a payday loan?
Payday lenders have different lending criteria than other financial institutions and credit issuers. This is how they can offer loans to borrowers with negative listings on their credit reports. However, the lender will still complete a credit check and applicants must meet the eligibility requirements. Lenders will consider your current employment, earnings and forms of income including government benefits like Centrelink. Lenders will also consider the last 90 days of your bank statements to determine if you can repay the loan.
What is the eligibility criteria for a payday loan?
The requirements will vary between lenders and specific loans, but you'll usually need to meet the following:
- Residency. Must be an Australian citizen or permanent resident.
- Age. Over 18 years of age.
- Income. Receive a regular income, either through employment or Centrelink benefits. People should note that many lenders won't approve applicants if government benefits are their primary source of income, though.
These are just some examples of the criteria you'll need to meet, so make sure to check the specific eligibility requirements when you're comparing your options.
Are there any guaranteed loans for bad credit?
Borrowers should be wary of any lender that offers "guaranteed" finance as this goes against ASIC guidelines to responsibly lend credit. Lenders should only supply finance to people who meet the specified eligibility criteria. If you do not meet a lender's eligibility criteria, you should not apply for the loan.
How can I improve my chances of getting approved for a bad credit payday loan?
The most significant ways to improve your chance of being accepted for a bad credit personal loan include the following:
- Does the lender accept bad credit applicants? Not all payday lenders accept bad credit applicants, so ensure that your chosen lender does before submitting an application.
- Check the eligibility criteria. Make sure that you meet the lender's eligibility criteria before applying for a loan.
- Check the minimum income. Do the requirements include a minimum income? Even if the lender in question accepts applicants with bad credit, if your income doesn't meet the criteria, you may be rejected.
- Don't over apply. Applying for multiple payday loans in a short space of time may see your application rejected.
The features of a payday loan
Here are some of the features, fees and conditions that you can expect when you apply for a payday loan:
- Online application. Applicants can apply for these products online. The application usually takes a few minutes and applicants should receive a response immediately.
- Turnaround to receive funds. Turnaround times to receive the loan can vary between 1 hour and 24 hours, but most lenders will at least offer a one-day turnaround. If the application is submitted by the set cut-off time (which is usually 4pm), then the funds should arrive the next business day.
- Different loan amounts. These lenders offer various loan amounts that often range between $100 and $2,000. You can also find loans up to $10,000.
- Term of loan. Loan terms can be as short as 9-12 weeks or last for longer periods of 12-24 months. Some lenders allow customers to repay the loan early without paying a penalty fee.
- Repayment. You'll need to repay a set amount at regular intervals (such as fortnightly). Depending on the loan, the repayments may be based on the customer's pay frequency and aren't as flexible as some other credit products. The repayments can be directly debited from the customer's account to the lender to avoid missing any payments. Some lenders allow customers to repay the loan early without penalty, but this will vary between providers.
- Fees. Payday lenders operate under strict Australian Securities and Investments Commission (ASIC) guidelines, so you will be charged set fees according to this. These fees include the establishment and monthly fees, which are usually a set percentage of the amount you're borrowing. You can learn more about these costs below.
How much does a payday loan cost?
Payday lenders set their own fees, but they're restricted as to how much they can charge. ASIC rules mean payday lenders cannot charge you more than the following:
- Loans under $2,000. Lenders cannot charge more than a 20% establishment fee and a 4% monthly fee. Plus, default fees and enforcement expenses.
- Loans $2,001 to $5,000. Lenders cannot charge more than a one-off establishment fee of $400 and a maximum annual interest rate of 48%, which includes all other fees and charges.
- Loans over $5,000 with terms over 2 years. Lenders cannot charge an interest rate over 48% p.a. that includes all fees and charges.
Before applying for a loan, make sure to read through the specific fees for each product and compare options before making a decision.
Why do bad credit payday loans cost so much?
Generally, bad credit payday loans are the most expensive form of credit because they are the easiest to obtain and pose the most risk to lenders. Borrowers with bad credit are higher risks to lenders because they have a recorded history of being unable (or unwilling) to repay credit cards, loans or bills on time. They may also have applied for multiple forms of credit and been denied, which can reflect badly on your credit score.
The price people pay for the "convenience" of accessing finance quickly regardless of their credit history arguably reflects the cost of payday loans. However, many people contest that payday lenders prey on the financially vulnerable with these high costs. This is because it can lead to a spiral of debt, which ultimately may benefit payday lenders.
That being said, payday lenders are all subject to responsible lending practices as enforced by ASIC. They are also heavily regulated and limited as to how much they can charge customers.
Can I get a low interest bad credit payday loan?
Unfortunately it is unlikely that you will find a bad credit payday loan that offers a low interest rate. Because of the additional risk posed by having a low credit score, most payday lenders will charge the maximum costs outlined above.
However, you may be able to find some lenders that are willing to offer a lower interest rate on a secured bad credit loan. Using an asset as collateral on your loan mitigates the risk to the lender, as long as the asset is of equal or greater value than the cost of the loan. Please be aware that this can be risky though, as your lender will have the right to repossess your property if you default on the loan.
What can bad credit payday loans be used for?
While payday loans can technically be used for any worthwhile purchase, a bad credit payday loan is something that ought to be used in the case of a financial emergency when no other forms of credit are available to you. This is because payday loans of any sort are not long-term financial solutions and should not be used for unnecessary purchases because of the high fees and interest rates attached.
The following are some examples of financial emergencies:
- Medical bills
- Vet bills
- Car repairs
- Unavoidable home repairs/purchases
It's worth noting that if you are struggling financially before applying for a payday loan, you may want to check out if you can qualify for any lower cost alternatives.
How to compare payday lenders
There are many payday lenders available, so it's important to compare options to ensure that the loan is right for you. Here are some of the factors that applicants should consider when weighing up their options:
- Compare the lenders. Lenders will have the right to access a customer's bank account details, so you need to be sure they are trustworthy and have a good reputation. When researching options, read through the policies and loan terms, contact the lender's customer service team to ask any questions before applying and read through reviews and testimonials online.
- Confirm the fees and interest rates. Payday loans charge higher fees than most other personal loans. Compare the establishment and monthly fees charged by different lenders. You can locate these fees in the comparison tables and product reviews on Finder as well as on the lender's website. Applicants should make sure they can afford these fees before applying.
- Loan extensions and redraws. Some loan companies can extend the term of the loan up to 90 days. Customers will be charged extra fees associated with this, so it should be avoided if possible. Before you sign anything, customers should ask what the terms and conditions are if they're unable to pay back the loan on time. This includes any additional fees that will be charged if the customer can't pay the loan back within the original loan term.
Pros and cons of payday loans
- Online application and turnaround time. Eligible applicants can apply online and receive a response shortly after submitting an application. If approved, customers can receive the funds within 24 hours.
- Fixed rates and charges. The costs are fixed and won't change throughout the loan repayment term.
- Bad credit history. Most credit issuers won't approve people with a bad credit history, so this is an option for customers who have negative listings on their credit report or a poor credit score. Other eligibility requirements still apply and if a customer is unable to make timely repayments, a payday loan could further hurt their credit history.
- Higher fees. The fees are higher than for most other personal loans, which is why it's important to pay the loan off in full during the repayment term.
- Payday loans are not a long-term solution. Payday loans are not a quick fix or long-term solution. It won't help minimise overall long-term debt and people should seek help from a financial adviser if they're struggling financially.
- Dishonest lenders. There are some fraudulent lenders operating online. Customers must do their research and ensure they're not applying for a loan with a dishonest lender before applying.
What Happens If I Miss A Payment?
If you miss a payment on a payday loan, you risk running up a number issues and costs. For this reason it is essential that if you think that you are going to be unable to meet a payment by the due date, that you contact your lender as soon as possible.
The lender in question may be able to make an arrangement with you to reschedule your payment free of charge. If you are facing financial hardship it is also important that you contact your lender, as they will likely have measures in place to help you with a new payment plan, or a reduced cost.
If you do not contact your lender and default on a repayment, the following issues can arise:
- Bank charges. If an automatic direct debit is not able to leave your account, your bank can charge you for missing the payment. This is usually a charge of around $5-$10 per missed payment, depending on your bank.
- Overdraft fees. If you have an agreed overdraft with your bank, your payment may be taken when you have insufficient funds, taking you into your overdraft. You bank will then charge you fees or interest on this borrowed money, as per your overdraft agreement.
- Dishonour fees. These are fees charged by the payday lender when there are insufficient funds in your account for the automatic direct debit to be processed. How much this will be will depend entirely on your lender, but there are no imposed limits on what lenders can charge with these fees. They may be $15 per missed payment, but some may be as high as $55.
- Late payment fees. This is the fee charged for making a late payment. Payday lenders may charge either dishonour fees or late fees, or both if they should choose to. There is also no limit as to what lenders can charge for these fees.
- Collection calls. If you miss a payment and fail to inform your lender, they may issue collection calls to your phone chasing the repayments.
- Having your property repossessed. This can only happen if you have a secured payday loan and you fail to repay. If your loan is unsecured, as most payday loans are, your lender has no right to repossess your property.
- Damaged credit rating. If you miss repayments, it can damage your credit score. And if you already have a poor credit score, this can be even more of a setback.
- Possible legal action. If you continue to miss your repayments, your lender could potentially take legal action against you.
How long does it take to get a bad credit payday loan?
Because their eligibility criteria is more relaxed, the processing time for payday loans is usually much quicker than most standard personal loans. This make payday loans generally very fast forms of funding.
Most applications for payday loans can also be done entirely online, and so only take a few minutes to complete. Modern lenders are also able to connect to your internet banking, to save you the time of uploading documents.
Funding for some payday lenders can take as little as an hour, and others can take a little longer, usually 1-3 days.
How to apply for a payday loan
To apply for a payday loan, simply click "Go to site" to visit the lenders website directly and submit an online application. Eligibility criteria on these loans will vary from lender to lender. However, most lenders will require you to be:
- Aged 18 or over
- An Australian citizen/permanent resident
- Receiving a regular income (if you receive Centrelink payments, they will usually need to make up less than 50% of your received income. However, this may not always be the case).
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