Payday Loan Interest Rates

Payday loans can offer customers a way to get quick access to cash for financial emergencies. People use payday loans for last minute expenses such as getting their car repaired or paying off a forgotten bill, as these loans are designed to cover people when they're caught short before payday. However, payday loans are an expensive way to borrow money so before applying for one it’s important to understand how they work, what fees are involved and what interest rates are charged.

How does a payday loan work?

Payday loans work by offering applicants a small amount of money, usually between $100 and $2,000, as a loan. These loans are referred to as "payday" loans because the amount and terms are usually set according to a person's income and pay frequency, and are designed to be paid back in line with when they next get paid.

How much are payday loan interest rates?

Payday lenders are restricted as to how much they can charge in interest and fees. The cost will also depend on how much someone borrows. Here is a breakdown of the maximum fees and rates payday lenders are able to charge:

The above caps don't apply to authorised deposit-taking institutions such as banks, credit unions or building societies.

What is a payday loan interest rate?

An "interest rate" depends on how much a loan applicant is borrowing and for how long, as well as factors such as their financial circumstances and their credit rating (however most payday lenders for loans under $2,000 will charge the maximum fees possible to all borrowers). To get an indication of the rate and costs, prospective applicants can use the payday loan calculator below.

Use the slider to select how much you want to borrow and for how long, and you will get an indication of how much you could be charged.

^{This calculator is designed to provide you with an estimate based on the numbers you enter. Your personal details are not taken into account and all calculations are based off the calculation model. This calculator is not intended to be the sole source of your information when making a decision regarding your loan, and this calculator also does not guarantee your eligibility. The calculator works off the following assumptions: fees do not change for the life of the loan, your lender will charge a 20% establishment fee and a monthly fee that is 4% of your principal loan amount. You may want to seek advice from a financial professional before signing up to a loan.}

How do these interest rates differ to rates of other financial products?

While these restrictions are in place to attempt to help to keep payday loans manageable, they are still an expensive way to borrow more and should only be used as a last resort. If available, other credit options are likely to be a better option for people who need to borrow money.

• Credit cards. Credit card interest rates vary depending on the type of card someone holds. Some rates can be as low as 9% p.a., while others can be as high as 22% p.a. Credit card rates are variable while payday rates are fixed. A good comparison to make with payday loan interest rates are credit card cash advances rates, which are typically around 22% and also give customers convenient access to cash.
• Personal loans. The interest rates charged on more traditional personal loans vary, but usually carry rates of between 8% p.a. to 15% p.a. (payday loan interest rates are charged monthly, so end up being very expensive when considered in terms of an annual rate). The rate someone is offered depends on whether the loan is secured or unsecured. Customers can compare and read more about personal loans on this page.

What other fees and charges come with payday loans?

Lenders are able to charge the establishment and monthly/annual fees outlined above if someone keeps their loan in good standing. If customers make payments late or default on your loans, lenders may also charge the following:

• Default fees or charges. These are charged by the lender if someone defaults on a payday loan. This amount is set by the lender and may include late fees that are charged until someone pays the loan back. A person's bank may also charge them an additional fee for defaulting on a direct debit.
• Enforcement expenses. These are charged if someone fails to pay back the loan and the lender is forced to take that person to court.

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Compare costs of payday loans

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Name	Product	Maximum loan amount	Term of Loan	Turnaround time	Arrears Fee	Costs	Fortnightly Repayment (for $1500 Loan)
Sunshine Short Term Loans		$2,000	9-14 weeks	30 minutes - conditions apply	$35	20% of loan amount + 4% of loan amount each month	$396	A small loan up to $2,000 that you repay over 9-14 weeks. Loans approved and funded in as little as 30 minutes.	Go to site More Info	Compare	loading Fetching your data...
Nimble Short Term Loan		$2,000	62 days to 9 months	1 hour - conditions apply	$15	20% of loan amount + 4% of loan amount each month	$372	A loan up to $2,000 with terms up to 62 days to 9 months. Centrelink cannot be your primary source of income.	Go to site More Info	Compare	loading Fetching your data...
Safe Financial Small Loan		$5,000	22 - 52 weeks	Same day - conditions apply	$35	Up to $2,000 - 20% establishment fee + 4% monthly. Above $2,000 - $400 + loan management fee of up to $399 + from 8.7% to 48% APR	$396	Borrow from $1,000 to $5,000 with same-day funding and no early repayment fees.	Go to site More Info	Compare	loading Fetching your data...
Fair Go Finance Small Loan		$2,000	3-12 months	1 business day	$35	Establishment fee 20% of loan amount + monthly fee 4%	$354	A small loan between $500 and $2,000 that can be funded in 24 hours.	Go to site More Info	Compare	loading Fetching your data...

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How to compare payday loans

While lenders are restricted in terms of the fees they can charge, it’s still important to compare options based on the other features offered. Here are some things to look out for when comparing payday loan options:

• What is the loan turnaround time?
  Most payday lenders offer a quick turnaround time, although some may be quicker than others. Prospective borrowers should be sure to check when the lender will be able to transfer the loan amount to them and whether this will meet their needs.
• Is the lender easy to contact?
  As most payday lenders operate online, borrowers want to be sure they are easily contactable via phone, email or live chat. If someone is having problems with repayments or needs to ask questions, they will want to be able to get in contact with them.
• Does the site have clear information?
  Borrowers should also check that they are able to find all the information that they need on the lender's website. Applicants should check to see if they can find a page for frequently asked questions, information about their fees, and terms and conditions.
• What are the loan terms and amount?
  A borrower should also check that they will be offered the loan amount and terms that they need. Some lenders only offer a small loan to new borrowers, while some may only offer very short loan terms that will make repayments too high to afford.
• Does the loan have any additional features?
  Some payday lenders offer other benefits and features that may be of interest to their customers. For example, Nimble offers a prepaid Visa Debit card that allows customers to receive their loans instantly should they need to borrow again.

Things to consider with payday loans

As with any type of loan, prospective applicants need to consider their own personal financial situation before they decide to take one out. They should think about the amount they're looking to borrow, the loan terms that they may be offered, and whether the repayments will be affordable to them. They should also consider whether a payday loan is the best type of finance for them, or whether they might want to look at credit cards, a line of credit or a secured or unsecured personal loan.

How to apply

To apply for a payday loan, customers can compare their options using the comparison table on this page. Once they find a lender, they can click ‘Go to Site’ and be directed through to the lender’s online application form. To apply, loan customers will need to be over the age of 18 and be receiving some sort of income directly into their bank account.