Payday loans can help you out when you're caught short before payday. Here's how to apply.
Payday loans are becoming increasingly popular in Australia, with more and more lenders on the market specialising in small, short-term loans. These lenders differ in their eligibility requirements and application processes, so here's a quick guide on how to find a lender and how to apply for a payday loan.
How to compare payday lenders
With the variety of payday lenders out there, it's important to know how to compare your options to find the right loan for you. Here's a few things to keep in mind:
- Fees. The Australian government imposed a cap on the amount of fees that payday lenders can charge, so check to see if they comply with these restrictions. Take a look at the fee cap outline below.
- Interest rates. With any loan, you should be aware of the interest rate you'll be charged for borrowing. Most payday lenders will tell you how much your repayments, including interest, will be before you sign for the loan.
- Loan terms. The loan terms for payday loans are usually quite short and will most likely be determined by the lender. These terms usually match up with your payment frequency.
- Default/missed repayment penalties. You shouldn't take out a payday loan if you think you will have any problems managing the repayments, but it's good to be aware of what will happen if you can't make a repayment or default on the loan.
Sunshine Short Term Offer
This is a short term loan offer with a fast and easy online application for bad credit borrowers who are employed. You can apply today to get approved for up to $2,000.
- Loan Amount: $2,000
- Loan Term: 9 weeks
- Turnaround Time: 30 Minutes - conditions apply
- Total Cost of Borrowing $100: 20% of borrowed amount + 4% of borrowed amount each month
- Bad credit borrowers OK
- Quick and easy Approval
- No Credit Checks - Must be employed
Payday loan providers are only allowed to charge the following for loans less than $2,000:
- A one-off establishment fee of 20% of the amount loaned
- A monthly account-keeping fee of 4% of the amount loaned
- A government fee or charge
- Default fees or charges
- Enforcement expenses if you default on the loan
How to apply for a payday loan
The application process will differ between payday lenders, but here's what you can generally expect when you apply for a payday loan.
- The application will most likely take place online, as most payday lenders are exclusively online lenders.
- You will need to provide proof of your identity, including a driver's license number or other forms of ID.
- You will need to provide details about your income, including payslips, salary amount, payment frequency and proof that you are paid regularly. Some lenders accept self-employed applicants, so for this you may need to provide bank statements or tax returns.
- You will need to provide details of your credit history to some lenders. Although they check your history, they are more interested in your current financial situation and your ability to repay the loan.
- You will also need to provide details of any existing debts, assets or credit.
Pros and cons of payday loans
- Convenient way to access small amounts of credit
- You may be approved with bad credit
- Your repayments are set out when you apply so you can budget to repay the loan
- There is a fee cap on payday loans so you know how much you can be charged
- It can be easy to start relying on these loans regularly, which can cost you a significant amount of money
- If you miss your repayments or default on the loan you can get into a debt.
What if I need another payday loan?
Most payday lenders will allow you to borrow for them more than once if you prove yourself to be a responsible borrower. Some lenders, such as Nimble, make it easy for people to repeatedly take out loans with them by providing them with 'members benefits'. These benefits include a member's area that makes it easy to apply and a Nimble debit card through which you can receive instantaneous loans.
Compare payday loans
Warning about Borrowing
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.
Frequently Asked Questions
How quickly will my payday loan application be processed?
Payday loan providers generally process applications quite quickly. You usually receive a response within 60 seconds and can sometimes receive your money within the hour.
How much can I borrow?
This will differ between lenders. Certain factors come into play when lenders decide how much to let you borrow, including your income, credit history, assets, etc. You will generally not be able to borrow more than $2,000 from a payday lender.
What can I use payday loans for?
Payday loans are designed to cover you for expenses that come up before payday. These can include car repairs, large purchases such as furniture or appliances, to pay forgotten bills or for medical emergencies. You should not use these loans to solve longer-term financial problems such as to make repayments on existing debts.
It's always important to compare your options when applying for any form of credit and Payday loans are no exception. Make sure you do you due diligence before applying for one of these loans.