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Payday loans for students

A guide to payday loans for students

Updated

Payday loans for students are small, short-term loans designed to cover financial commitments until a person's next payday. Payday loans are considered to be an expensive form of finance, because the eligibility criteria for them is relatively non-exclusive. This means that people with low incomes or poor/no credit ratings (such as students with very little financial history or part-time jobs) can still often qualify for finance. These loans usually range from $100 to $2,000.

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⚠️ Warning about Borrowing

payday-warningDo 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.

Students should be aware that the repayments on payday loans are often high because of their short repayment terms, so they should only be used in financial emergencies and in cases where the borrower is certain that they will not have trouble repaying the loan. Payday loans are not long-term financial solutions.

Find out how these loans work in this guide.

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Comparison of payday loans for students

Data indicated here is updated regularly
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.
Nimble Short Term Loan
$2,000
62 days to 3 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 3 months. Centrelink cannot be your primary source of income.
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 + from 8.7% to 48% APR
$396
Borrow from $1,000 to $5,000 with same-day funding and no early repayment fees.
Fair Go Finance Small Loan
$2,000
3-12 months
1 business day
$35
Establishment fee from 20% of loan amount + monthly fee from 4%
$354
A small loan between $500 and $2,000 that can be funded in 24 hours.
Speckle Small Loan
$2,000
3 to 12 months
1 business day
$5
10% of loan amount + 2% of loan amount each month
$348
A small loan up to $2,000 from a lender backed by NAB. Transparent eligibility criteria and competitive costs.
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Compare up to 4 providers

How does a payday loan work for students?

Most students do not have steady incomes and therefore may find it difficult to get approved for standard loans, so payday loans can be used as emergency funding for students in some cases where alternatives to payday loans are not available. Payday loans offer short-term financing with lenient lending criteria and short approval times.

To be potentially approved for a payday loan, students will need to submit their identification details and prove that they can repay their loans by providing 90 days worth of bank statements. The application and approval process is completely online, so there's no need for any paperwork or face to face meetings. Students should be aware that may be required to repay the loan in less than a month, depending on the terms of the particular loan they are offered. Fees associated with payday loans are also a lot higher than what one would normally find personal loans.

Student credit cards may be an alternative to payday loans.

How much will the loan cost?

It's important that students take the time to educate themselves on the costs and risks involved with taking out a payday loan. It may seem like an easy option or "quick cash", but these loans can make financial troubles much worse for people who aren't careful.

There are fee restrictions imposed on payday loans by ASIC (the Australian Securities and Investments Commission), but some disreputable lenders may not adhere to these restrictions - so it's good to be aware of them. Even within the boundaries of the restrictions, these loans still work out as some of the most expensive on the market. For loans of under $2,000 that have terms of between 16 days and 1 year, here are the fees that lenders are able to charge:

  • A one-off establishment fee that is 20% of the principal amount borrowed
  • A monthly account-keeping fee that is 4% of the amount borrowed
  • Relevant government fees/charges
  • Enforcement expenses if you fail to pay back the loan

Student should also note that there is no cap on late payment or default fees, so if they are unsure whether or not they can repay the loan, they should reconsider submitting an application.

Are students eligible for payday loans?

To be eligible for a payday loan, a student will need to be over the age of 18 and in receipt of a regular income. Some students may:

  • Be casual employees. Lenders need to see evidence of a regular income, but some will accept casual employees. Applicants will need to show that they've been in receipt of an income for at least three months to be eligible for a payday loan. Their income will likely affect the amount of money that they are eligible to borrow - the smaller the income, the less they will be eligible for.
  • Be receiving Centrelink payments. Many lenders consider those receiving Centrelink benefits for short-term loans. Applicants usually need to earn less than 50% of their income from Centrelink, but they may still be eligible if they're unemployed.
  • Have bad or no credit. Payday lenders are very flexible when it comes to someone's credit history. Many will approve applicants who have a credit default, or even two. Students may be more likely than most people to have very little idea of what their credit score actually is - luckily they can check it online for free.

How students can compare their options

  • Loan term.

    Being a short-term loan, a payday loan for students will usually have a repayment term of between 16 to 30 days (but loan terms can vary up to 1 or even 2 years) depending on how much they want to borrow. When choosing a payday loan, applicants should consider when they are likely to get their next income through, so that they can match their repayments to their pay and avoid late payment penalties.

  • Approval time.

    It's important for students to compare options and choose a payday loan company with an approval time that suits their financial requirements. Most payday lenders offer same-day or next-day funding as standard, but some may charge extra for this service.

  • Interest charges.

    The fees and charges of a payday loan can work similar to an interest rate calculation. Compare the Annual Percentage Rate (APR) on different payday loans for students to ensure you avoid paying high fees especially if you miss a repayment. Payday loans usually have high interest charges, so be extra careful when settling on a particular one and take time to shop around to get a relatively cheaper short-term solution to your financial burdens.

  • Late payment fees.

    While shopping around for a payday loan, students should read the fine print to avoid late payment penalties. They should also be sure to only borrow what they need, as over-borrowing will incur more expense. All payday loan applicants should ensure that they can manage the repayments to avoid falling into a debt trap and having to pay large amounts in penalties and interest fees.

  • Lender reputability.

    The payday loan business can be notorious for attracting disreputable lenders who prey on financially vulnerable people. So, payday loan applicants should always check a lender's reputation online prior to submitting an application. They can do this by viewing their reviews, noting how easy they are to contact from their website, and observing how clear their repayment and fee schedule is displayed to potential customers.

What are the risks in obtaining a student cash loan?

  • Being unable to meet repayments. It is important to keep in mind that like all short-term loans, payday loans for students always have high fees/interest rates. This could mean that by the time someone has paid off their payday loan, there won’t be enough funds in their account to carry them to the next payday. This cycle can be very unhealthy for a person's finances.
  • Being overcharged with fees. If someone takes up a payday loan, they need to be sure to make their repayments on time, as these loans usually carry heavy penalties for missed repayments. Paying exorbitant fees for late payments is a significant problem for people in full-time employment, so students may find it even harder than most. Late payment fees can suck students into a cycle of debt and even ruin their credit rating, making it harder to access a mortgage in future.
  • Unreputable lenders. All Australian lenders should be accredited by ASIC. Check for a credit licence on the ASIC Register and ensure that the lender is easily contactable.
  • Impact on credit score. Every loan application shows up on credit reports. While lenders might not consider credit history, applying for lots of loans within a short period can have a negative impact on your credit score in the future.

Frequently asked questions

How much can I borrow?

Most payday loans, or Small Amount Credit Contracts (SACCs) will allow customers to borrow anywhere from $100 to $2,000, to be repaid on a term of 16 to 30 days (but sometimes up to 1 year). The length of the loan term is partly determined by the loan amount and the length of the applicant's pay cycle i.e. monthly, fortnightly.

What information is required with my application?

For most payday loans for students, applicants are required to be an Australian citizen or have a student’s Visa. They will also be required to upload bank statements as proof that they will be able to handle the required repayments.

When will the funds be available?

Once approved, the funds should be wired to the successful applicant's bank account that same day (if the application is submitted before 15:00) or the next business day. Processing and approval of the loan usually takes less than 60 minutes, but this can vary depending on the lender.

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