If you have a bad credit history, you could apply for a payday loan without a credit check. These loans are more expensive and come with short repayment terms. You will have to provide your bank statements, income and employment details in the application.
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. Find out more here: https://www.finder.com.au/coronavirus-financial-help
⚠️ 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 does a "no credit check" loan involve?
A payday loan is a short-term loan you can apply for if you need to borrow a small amount of cash. This can be used to pay for emergency expenses or to tide you over until payday.
Some payday lenders offer loans without checking your credit history, but there are other requirements you will have to meet, including having regular income and employment.
These lenders often specialise in loans for applicants with bad credit. As the risk to the lender is high, so are the fees and charges. These loans also feature a shorter repayment window.
We've listed what you can expect from a no credit check payday loan below:
- The lender will not request a credit report from a credit bureau. When you apply for a loan, the lender will not request for your credit report from any credit bureau to review your borrowing history.
- The loan details will be listed on credit reports. While the lender will not check your credit report, it will tell the credit bureau that you applied for a loan. This means that the credit enquiry and the loan (if you're approved) will be listed on your credit report.
- Bank statements will be checked. The lender will use the last three months of banking history to judge whether you can afford the loan. It will consider income, expenses and whether the account has been overdrawn. This is done to understand your ability to repay and see if you're under any financial stress.
- Applicants must earn an income. Although credit checks are not performed, you are still required to meet eligibility requirements and demonstrate that you can repay the loan by providing evidence of income, including proof of employment, payslips and Centrelink income.
What should I consider before applying for a payday loan?
Before applying for a payday loan, you should keep in mind:
- Costs. A payday loan is costly. As these loans are a risky form of finance, lenders charge more than they would for other loans.
For instance, if you borrow $2,000 or less, most payday loans will charge an establishment fee of 20% and a 4% monthly service fee. This is the current maximum fee set by the Australian Securities & Investments Commission (ASIC). Lenders cannot charge more than this, but there are also other costs you may incur.
You could be charged a government fee, which covers any duties owed to the government. However, most lenders do not charge this.
There may also be a missed payment or dishonour fee. This will be charged if you don't have enough money in your account to make the repayment as scheduled.
You could also be charged a default fee if you don't make the payment by its due date. Plus there could be an enforcement fee, in case you fail to pay back the loan.
- Lender's reputation. Apart from the cost of the loan, there is also the lender to consider. Before you apply for a payday loan, you should always ensure your lender is licensed with ASIC.
At Finder, we only include licensed lenders for you to compare. You could also search for your lender on the ASIC Professional Register.
- Loan terms. Most payday loans have short repayment terms, ranging from a few weeks to a year or two.
You should take your loan term into account when you are calculating the cost of the loan. This can help you understand if you can afford it. Ask yourself if you will find these loan terms achievable, and if you will be able to make your repayments according to these terms.
There are additional costs involved if you miss your payments, pay late or default.
- Affordability. When you take out a loan, no matter the type of loan you apply for, you should be able to realistically pay it back.
Before you apply, you should ask yourself if you can afford the loan and how you intend to pay it back. Once you have taken into account the cost and the terms, take a look at your repayment schedule and see if you can meet it.
Every loan application is entered into your credit report. If your loan application is rejected, it could have a negative effect on your credit score.
How will my application be assessed?
Lenders base their decisions for no credit check payday loans on criteria different from banks. While they do not perform a credit check, they will use other financial indicators to see if you can pay back your loan. These include your income and expenses, whether you are currently employed, and if you have other loans and outstanding credit card bills. These factors, and not your credit history, will be used to assess your ability to pay back the loan. They will also look into whether you will face financial difficulties if they grant you a loan.
How much will the loan cost?
The fees and interest rates associated with a no credit check loan differ from lender to lender. Typically, smaller loans must be repaid within a period of 16 days to 1 year, while larger loans can offer repayment terms of up to 2 years. The fees will vary depending on the size of the loan.
- Loans of up to $2,000. For small loans of $2,000 or less, you will be charged a maximum establishment fee of 20% of the loan amount.
Additionally, the ongoing monthly fee is capped at 4% of the loan amount. These loans typically come with minimum terms of 60 days.
- Loans of between $2,001 and $5,000. These loans are called medium loans and are usually repaid between 16 days and 2 years.
Establishment fees are limited to $400, while interest rates are limited to a maximum of 48% p.a.
- Loans of over $5,000. If your lender offers personal loans over $5,000, it can charge up to 48% annually, including establishment and other fees.
The eligibility requirements for a no credit check payday loan
The specific requirements for a no credit check payday loan vary between lenders and products, but the criteria usually include:
- Age. You must be at least 18 years old.
- Income. You must be able to prove you receive a regular income. If you receive support from Centrelink, you'll need to show that at least 50% of your income is from alternative sources.
- Banking statements. To assess income and expenses, lenders usually require read-only access of at least 90 days of your bank statements.
- Liabilities. You must provide details of any other liabilities, including outstanding loans or credit card repayments to the lender.
If you meet these eligibility requirements, you could proceed to apply for the loan online, although approval is not guaranteed. If approved, the lender may make the deposit within a matter of days.
What are the risks of no credit check loans?
- Disreputable lenders. Check if your lender has a credit licence and is not charging you more than ASIC allows. The lender should be easily contactable.
- Unaffordable repayments. Consider the size of the regular repayments and ensure you can repay the loan during the loan term. If not, extra fees apply to extend it. Be careful, since repayment periods for these kinds of loans tend to be shorter than regular loans.
- Multiple applications. Every loan application shows up on your credit report. While lenders might not consider credit history, several applications within a short period can have a negative impact on your credit score moving forward.
- Check rates and fees. Establishment and monthly fees are capped, so be wary of lenders quoting prices beyond the legal maximum amounts. Be crystal clear on what will be charged for late payments or a default on the loan. The total cost of the loan matters here – lenders can charge interest rates on top of everything else.
- Long-term repercussions and legal issues. Once the loan agreement is signed, you are bound to its conditions until the loan and any associated rates and fees have been paid. Typically, these loans are unsecured, which means that the lender can initiate legal proceedings against you if you can't repay.
How can I apply for a no credit check payday loan?
If you've decided to take out a no credit check payday loan, you can begin by checking your eligibility. If you are eligible for a loan, you can start comparing lenders to find one that suits you. Keep in mind the costs, charges and risks. Once you find a loan you wish to apply for, you can click "go to site" to begin your application.
Questions we've been asked about no credit check loans
I receive income from Centrelink. Can I still apply?
Depending on the lender, a pension or Centrelink can be considered a legitimate income. However, applicants won't usually be approved if the government benefit accounts for more than 50% of their income.
Are no credit check loans guaranteed?
No loan is ever guaranteed. If you see a lender promising guaranteed approval, you shouldn't apply. Legitimate lenders offering loans with no credit checks still need to assess if customers can afford to repay the loan, which is why they consider income, employment, bank statements and other factors before approving a loan.
Besides bank statements and proof of income, what other information do I need to provide?
You should also have the following handy when applying:
- Driver's licence or another form of photo ID
- Medicare number
- Utility bills
Will the lender contact my employer?
In some cases, yes. The lender might need to verify that you are indeed employed and receiving an income, especially since there's no credit check for this loan type. Lenders may also specify on their website that they don't tell employers that you're applying for a loan.
Can I repay my loan early?
Most payday lenders will let you repay your loan early and will not charge you any additional fees.
Are no credit check loans legal?
Yes. If a lender is certain that you won't face financial hardship or struggle to make repayments, there will be no credit checks performed on your account.