While approval can be fast, a payday loan can also attract higher costs than other personal loans. This makes it important to carefully weigh up the pros and cons before applying for a short term loan to finance emergency costs. Use this guide to compare loans and learn about the different costs, features and risks so that you can decide if this type of loan is suitable.
If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call the Financial Counsellors hotline on 1800 007 007. It is open from 9:30am to 4pm, Monday to Friday. When comparing short term loans, ensure you take into consideration any fees, charges and rates you may be charged. It's important to weigh up all your options before applying for any form of credit.
⚠️ Warning about Borrowing
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:
- 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.
What is an emergency payday loan?
Also known as short term loans, this type of finance typically allows people to borrow between $500 and $2,000 for up to 12 months. Some short term lenders also offer fast applications and turnaround times of 24 hours.
Payday loan repayments are usually structured to fit with when a customer receives their salary or other form of income (for example, once per week or fortnight). As well as paying back the amount that is borrowed, customers will have to pay loan fees. These are regulated by the government for loans of up to $2,000, and can consist of a loan establishment fee of up to 20% of the amount borrowed, as well as a monthly loan fee of up to 4% of the amount borrowed. This means the cost of payday loans can be very high when compared to other personal loan options.
Nimble Short Term Loan
Go to site
25% discount on the establishment fee (now 15% of the loan amount) and monthly fee (now 3% of the loan amount)
Nimble offer a fast and easy online application. You can apply today to get approved for up to $2,000.
- Loan amount: $2,000
- Loan term: 62 days to 3 months
- Turnaround time: 1 hour - conditions apply
- Fees: 15% of loan amount + 3% of loan amount each month
- Quick and easy Approval
- Borrow up to $2,000
- 100% online application
- SMS payment reminders
Comparison of Emergency Payday Loans
Updated February 28th, 2020
How to get an emergency payday loan
People can apply for a payday loan online, providing they meet the lender's eligibility criteria. Typically, a person must:
- Be 18 years of age or older
- Earn a minimum income, usually around $350 a week
- Be employed, receive an income or government benefits
- Receive less than half of their income from benefits
- Get paid frequently into a bank account (not in cash) either daily, weekly or monthly
- Not be self-employed (some lenders may make an exception)
- If they have bad credit, they need to prove that your current financial situation is stable and reliable
Note that meeting the eligibility criteria does not guarantee that a person will be approved for a loan.
How long does it take to get a payday loan?
This depends on the individual lender. In the table above, you will see an estimated time of how long each loan will take to be processed. The average processing time is 1 business day, but some lenders may be able to provide the funds on same day when an application is submitted before 2:30pm.
How much do payday loans cost?
For loans less than $2,000 that come with terms of between 16 days and 1 year, lenders are restricted to the following fees:
- An establishment fee that is up to 20% of the loan amount
- A monthly fee that is up to 4% of the loan amount
- A government fee or charge
- A default fee or charges
If someone defaults on a loan, the maximum a lender can charge is 200% of the amount borrowed – including any repayments that were made, plus default fees.
What are some situations when people would apply for a payday loan?
Payday loans are usually considered in emergency situations when there is limited access to other forms of credit. Some examples of when people might consider a payday loan include:
- Car repairs
- Emergency medical situation
- Forgotten bills or accounts
- Replacing necessities, such as a fridge or washing machine
As payday lenders focus more on a person's current financial situation than on past debts or issues, these types of loans are often looked at by people who need quick access to credit but have poor credit history.
However, people applying for payday loans still need to provide details of their finances, incomes, assets and debts, as well as evidence that they receive regular pay. They will still need to be able to make the required repayments and factor in the loan's fees.
The pros and cons of using payday loans for emergencies
- Quick turnaround. These loans are usually approved via an online application process and once approved you can expect to receive your money on the next business day at the latest.
- Restricted fees. Payday loan providers are restricted as to the type and amount of fees they can charge you, so there's little chance of you being ripped off.
- Outline repayments. Before you settle the loan you will be able to review an outline of your repayments. This feature will be available from most lenders.
- Costly. For the convenience these loans offer you will usually have quite a high rate of interest.
- Unreliable lenders. Although there are a good deal of reputable lenders on the market, there are some unscrupulous lenders out there, so be sure you do your research before going with one lender.
Payday loans are an option to consider in emergency situations, but remember to compare your options before you apply and only submit your application if you feel you can repay the loan.