While personal loan and credit card lenders often won't approve someone with bad credit, payday loans are a type of unsecured loan that could be available to someone with a low credit score. However, borrowers with bad credit are still required to meet the other eligibility criteria to prove that they can afford to repay a loan before they are able to get approved. While payday loans may seem convenient for people in need of finance with less than perfect credit histories, they are also an expensive form of credit. Therefore, it's important to compare your options and understand the risks involved before applying.
Use this guide to compare payday loans that are available to people with bad credit, to learn more about the fees and features as well as the eligibility criteria that must be met.
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⚠️ 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.
Sunshine Short Term Loans
This is a short-term loan offer with a fast and easy online application for good or bad credit borrowers. You can apply today to get approved for up to $2,000. Get your loan funded in 30 minutes - conditions apply.
Loan Amount: $2,000
Loan Term: 9-14 weeks
Turnaround Time: 30 minutes - conditions apply
Fees: 20% of loan amount + 4% of loan amount each month
A payday loan is a small, short term loan that doesn't require borrowers to use an asset (such as a car or property) as collateral. Some payday lenders consider people with bad credit but due to the higher risk for them, the loan may have a higher interest rate.
What types of unsecured bad credit loans are available?
There are a few different types of unsecured bad credit loans that you may want to consider:
Payday loans. These short term loans usually vary between amounts of $100 and $2,000. Borrowers must usually repay the amount in fixed repayments that line up with their pay schedule (such as fortnightly) over a loan term of 16 days up to 12 months. Some payday lenders don't conduct credit checks, but will still consider your ability to repay the loan. All applications for loans (whether approved or denied) are also listed on your credit report.
Debt consolidation loans. If you're struggling with multiple debts, you could consider combining them under one new account with a debt consolidation loan. This could help reduce interest costs and the stress that comes with managing multiple accounts. Although some lenders may consider applicants with bad credit, it's important to check the eligibility requirements before applying.
What to compare before applying for a short term loan
Before applying for one of these loans, consider the following features, fees and repayment conditions that apply:
Fees. Loans up to $2,000 can charge up to 20% for an establishment fee and a 4% monthly fee. For loans between $2,001 and $5,000 lenders can charge a one-off fee of $400 and a maximum annual interest rate of 48%. For loans over $5,000 lenders cannot charge more than 48% which includes all interest and fees.
The lender. It's also important to check the lender's reputation before you borrow from them. Before applying, read through the terms and conditions, ensure the fees and features are clearly listed, check customer reviews and try to contact the lender's customer service team to see if they're transparent and easy to get in touch with.
Repayments. Payday lenders usually require borrowers to make regular repayments in accordance with the frequency of their income. For example, if a customer is paid fortnightly, they will be required to make repayments every two weeks around the time that they receive their pay. It's important to check if you can afford the regular repayments before applying because lenders will charge a late payment fee if you can't pay it on time.
Loan term. Short term borrowers usually must repay their loan within a loan term of 16 days up to 24 months. Although a longer loan term will give you more time to repay the loan, it means you'll have to pay more in monthly fees for the duration of the loan. Some lenders allow customers to repay their loan in full without paying any penalty fees, though.
How to apply
If you've compared your options and confirmed that you can afford to make the repayments, you can apply for a loan online or in a branch. Before you do, check if you meet the eligibility requirements and that you have the necessary information to complete the application.
Age. Applicants must be over 18 years old.
Income. You'll need to confirm your employment status, your employer's name and their contact details. Some lenders will accept applicants who receive Centrelink payments but it usually can't make up more than 50% of the borrower's total earnings.
Residency. Some lenders require applicants to be permanent Australian residents.
Information to provide
Personal details. This includes full name, date of birth, residential address and contact information.
Loan information. Request the loan amount and confirm the purpose of the loan.
Finances. You'll be required to confirm your income, expenses and liabilities (such as other loans or credit card repayments) by providing recent payslips and bank statements.
If you have the necessary information, the application shouldn't take longer than a few minutes to complete and you should receive a response shortly after submitting it. If approved, you may receive the funds within an hour or one business day.
A payday loan is an unsecured form of credit. Although some lenders consider applicants with bad credit, it's important to weigh up the fees and features as well as the eligibility requirements to ensure this is the right option for you.
Matt Corke is Finder's head of publishing for rest of world and New Zealand. He previously worked as the publisher for credit cards, home loans, personal loans and credit scores. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time, he has survived the dot-com crash and countless Google algorithm updates.
In this submission to the Treasury inquiry into Future Directions for the Consumer Data Right being led by Scott Farrell, we focus on the topic of switching and how this could be encouraged through the introduction of write-access to the CDR. We also share some details on switching in the industries set to be covered by the CDR, as well as high-level views on how write-access could be used to enable payment initiation through the CDR.
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