personal-loans-vs-cash-loans

Personal loans vs payday loans

Find out the difference between personal loans and short-term loans and learn which is best for you.

There is a wide range of loan options available to those who are in need of money. Each type of personal finance is suited to a different type of borrower and can be used for different purposes, and this includes personal loans and online cash loans. In this guide we break down the key differences between the two, outline their costs and help you determine which will be the best loan for your needs and situation.

Payday loans Personal loans
  • Can be a small loan (below $2,000), medium loan ($2,001-$5,000) or a large loan (over $5,000)
  • Usually unsecured
  • Come with higher interest rates and fees when compared to personal loans
  • Loan amounts differ, but you can usually find lenders offering between $5,000 and $100,000
  • Can be secured, unsecured or as a line of credit
  • Interest rates differ depending on whether security is offered, but they usually range between 5% and 16% p.a.

Learn about more of the differences in fees and features in the guide below the table.

Compare payday loans and personal loans

Updated October 19th, 2018
Name Product Maximum Loan Amount Term of Loan Cash Deposited In Costs Fornightly Repayment (for $1500 Loan)
$2,000
9-15 weeks
30 minutes - conditions apply
20% of loan amount + 4% of loan amount each month
$396
A small loan up to $2,000 that you repay over 9-15 weeks. Loans approved and funded in as little as 30 minutes. Centrelink must not be your primary income
$2,000
Up to 2 years
3 hours - conditions apply
47.8%
$316.7
Apply for up to $2,000 and be able to access your approved loan as a convenient line of credit.
$2,000
62 days to 1 year
1 hour - conditions apply
20% of loan amount + 4% of loan amount each month
$396
A loan up to $2,000 with terms up to 62 days to 1 year. Centrelink cannot be your primary source of income.
$8,000
Up to 2 years
1 business day
28.95% p.a. + 17.8% upfront establishment fees (comparison rate 47.68%)
Apply for up to $8,000 and receive your funds in 1 business day. All credit histories considered. Note: You must earn more than $500 per week.
$2,000
6-12 months
Same day - conditions apply
20% of loan amount establishment fee + 4% of loan amount monthly.
$396
Credit24 offers this loan up to $2,000 and gives you 12 months to repay.
$2,000
3-12 months
1 business day
Establishment fee from 10% of loan amount + monthly fee from 2%
$354
A small loan between $500 and $2,000 that can be funded in 24 hours.
$2,000
6 to 12 months
Overnight
20% of loan amount + 4% of loan amount each month
$396
A short-term loan from $500 that you can have up to 12 months to repay. All credit histories considered.

Compare up to 4 providers

Rates last updated October 19th, 2018
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Monthly Service Fee Application Fee Product Description Monthly Repayment
Citi Personal Loan Plus
From 8.99% (variable)
9.96%
$5,000
3 to 5 years
$10
$199
You'll receive a variable rate between 8.99% p.a. and 17.99% p.a. (9.96% p.a. to 18.91% p.a. comparison rate) based on your risk profile
A credit limit up to $75,000 that you can continue to draw down over terms up to 5 years.
Harmoney Unsecured Personal Loan
From 6.99% (fixed)
7.69%
$5,000
3 to 5 years
$0
$500 (Upfront fee)
You'll receive a fixed rate between 6.99% p.a. and 26.95% p.a. based on your risk profile.
Apply for a loan up to $70,000 and repay your loan over 3 or 5 years terms.
RateSetter 3-Years Personal Loan
From 8.69% (fixed)
11.24%
$2,001
0.5 to 5 years
$0
$220
You'll receive a fixed rate from 8.69% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 6 months. Interest and comparison rates calculated for a loan term of 3 years.
SocietyOne Unsecured Personal Loan
From 7.5% (fixed)
9.51%
$5,000
2 to 5 years
$0
3% (of loan amount)
You'll receive a fixed rate between 7.5% p.a. and 19.99% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
HSBC Personal Loan
From 9.5% (fixed)
10.06%
$5,000
1 to 5 years
$5
$150
You'll receive a fixed rate between 9.5% p.a. and 15.99% p.a. based on your risk profile
An unsecured personal loan with a tailored, fixed rate where you can make additional and early repayments without penalty.
Latitude Personal Loan (Unsecured)
From 13.99% (fixed)
15.19%
$3,000
2 to 7 years
$13
$250 (Loans under $4000 - $140)
You'll receive a fixed rate between 13.99% p.a. and 29.99% p.a. based on your risk profile
Apply for what you need from $3,000 and use it for a range of purposes. Flexible repayments options.
Westpac Unsecured Personal Loan
12.99% (fixed)
14.14%
$4,000
1 to 7 years
$12
$250
You'll receive a fixed rate of 12.99% p.a.
Benefit from the security of a fixed rate with the flexibility of additional repayments. Existing Westpac customers may qualify for discounts.
Latitude Low Rate Personal Loan (Unsecured)
10.99% (fixed)
12.21%
$20,000
2 to 7 years
$13
$250
You'll receive a fixed rate of 10.99% p.a.
A secured or unsecured loan available to homeowners with a large minimum borrowing amount of $20,000. Benefit from flexible repayments and fast approval.
Pepper Money Unsecured Fixed Rate Personal Loan
From 9.99% (fixed)
9.99%
$5,000
1 to 7 years
$0
$0
You'll receive a fixed rate between 9.99% p.a. and 27.99% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no monthly or application fees.
NOW FINANCE Personal Loans
From 8.95% (fixed)
10.56%
$5,000
1.5 to 7 years
$13
$495 (Based on $10,000)
You'll receive a fixed rate between 8.95% p.a. and 16.95% p.a. based on your risk profile
Apply for loans from $5,000 and get a dedicated loan manager. No security required. Note: Get your loan approved and settled before 31 October 2018 and receive a $200 Coles gift card.
St.George Unsecured Personal Loan - Fixed Rate
From 12.99% (fixed)
14.06%
$2,000
1 to 5 years
$12
$195
You'll receive a fixed rate between 12.99% p.a. and 19.99% p.a. based on your risk profile
A low minimum borrowing amount of $2,000 to fund a range of purposes.
Australian Military Bank Fixed Rate Personal Loan
From 7.93% (fixed)
8.77%
$1,000
1 to 5 years
$10
from $100 to $500
You'll receive a fixed rate between 7.93% p.a. and 18.87% p.a. based on your risk profile
An unsecured loan with a low minimum borrowing amount and flexible repayment options.
Australian Military Bank Variable Rate Personal Loan
From 7.88% (variable)
8.72%
$1,000
1 to 7 years
$10
from $100 to $500
You'll receive a variable rate between 7.88% p.a. and 18.82% p.a. based on your risk profile
An unsecured loan with flexible repayment options and a low minimum borrowing amount.
RACQ Bank Unsecured Personal Loan
12.95% (variable)
13.25%
$3,000
5 years
$0
$200
You'll receive a variable rate of 12.95% p.a.
A low minimum borrowing amount of $3,000 that you can use for a range of purposes. Benefit from member discounts and flexible repayments. Only available to QLD residents

Compare up to 4 providers

What's the difference between personal and payday loans?

There are several key differences between personal loans and short-term cash loans:

  • Loan amount. You can borrow up to $5,000 from many cash lenders, and some offer loans as high as $10,000. Personal loans come with much higher minimum and maximum loan amounts, with lenders rarely offering loans below $5,000 but having maximum amounts as high as $80,000-$100,000.
  • Eligibility. Personal loans offered by banks and credit unions have strict eligibility criteria that often includes good credit and a regular income from employment or above a certain amount. Cash lenders that offer short-term loans are much more flexible and will consider those with bad credit, those who receive Centrelink payments as income or people who are unemployed.
  • Lenders. Personal loans are offered by banks, credit unions, building societies and standalone lenders. Cash loans tend to be offered by lenders specialising in that type of product.
  • Loan term. Cash loans come with much shorter terms, usually between 16 days and one year (depending on the loan amount). Personal loans, on the other hand, come with a minimum loan term of one year and a maximum of between five and seven years.

What is the cost difference between a personal loan and a short-term loan?

Online cash loans are heavily regulated by ASIC and lenders are restricted as to what fees and rates they can charge. Personal loans do not have such restrictions as long as they are offered by an Authorised Deposit-taking Institution such as a bank or credit union.

Payday loan costs
  • Cash loans under $2,000 with terms of between 16 days and one year cannot charge more than a 20% establishment fee and a 4% monthly fee.
  • Cash loans between $2,001 and $5,000 with terms of between 16 days and two years are restricted to a $400 establishment fee and an interest rate of 48% p.a.
  • Cash loans over $5,000 or with terms longer than two years cannot exceed an interest rate of 48% p.a., which includes all fees and charges.
Personal loan costs

How can I decide which type is right for me?

While there are similarities between these two products, there are stark differences as well. Asking yourself the following questions will help you decide which type of loan is right for you:

  • How much do you need to borrow? Personal loans allow you to apply for a much larger loan amount, while cash lenders usually have maximum amounts of $2,000 (although some lenders will provide loans of up to $10,000).
  • When do you need the money? Cash lenders offer a quick turnaround for your loan and can have your approved funds in your bank account within the next business day. Some personal loan lenders offer same-day turnaround for existing customers but the usual waiting time is a few days to a few weeks.
  • How is your credit history? Online cash lenders have more flexible eligibility criteria than lenders offering standard personal loans. You may still be able to apply for a cash loan if you have bad credit or a low income. Personal loans come with more stringent eligibility criteria. The majority of personal loan lenders will require you to have good credit and will usually have a minimum income requirement to show you can repay the loan.
  • What can you afford to repay? Short-term cash loans come with much higher rates and fees, meaning higher repayments. Your loan will be repaid in a shorter period of time but you need to determine your ability to afford the repayments. Personal loans come with lower rates and fees, and while they are spread over a longer term, they may make for more manageable repayments.

Picture: Shutterstock

Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.
Ask a question
Go to site