There are heaps of short-term lenders, also known as "payday lenders" available in Australia. While many of these lenders may seem similar, they all have noticeable differences. These differences can include the amount you pay for late fees, repayment terms, redraw options or how long it takes to get approved.
This guide will break down the important features of Wallet Wizard and MoneyMe to help people who may be considering a payday loan to make the most informed option possible.
Are you struggling financially?
If you're struggling financially and would like to speak to someone for free financial advice, information and assistance you can call the Financial Counsellors hotline on 1800 007 007 (open from 9:30am to 4pm, Monday to Friday). If you are suffering financial problems related to the coronavirus pandemic you may be eligible for additional support.
⚠️ 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.
|How much do they lend?||$500 to $8,000||$500 to $50,000|
|What are the repayment terms?||Differs with each loan amount as the product is a line of credit.||Small loans (under $2,000): 1 to 2 months|
Medium loans ($2,001-$5,000): 3 months to 2 years
Personal loans ($5,001-$10,000): Up to 5 years
|How much will the loan cost?||47.8%||Small loans (under $2,000): 11-20% of loan amount (establishment fee) + 4% of loan amount each month|
Medium loans ($2,001-$5,000): $295(establishment fee) + 6.25-19.95% p.a. interest
Personal loans ($5,001-$10,000): from $395 to $495
|Eligibility criteria||Not clearly stated. Discharged bankrupts and Centrelink borrowers are eligible.||You must be 18+, an Australian resident and employed with a decent credit history.|
|How quickly is the loan funded?||Within two to three hours if the loan is approved before 2:30pm. Next business day for loans confirmed after this time.||Applications can be approved within five minutes and MoneyMe aims to have the funds to the successful applicant in one hour.|
|Is there a prepaid card?||Yes||No|
|How much is charged for a late repayment?||Direct debit reversal fee: $10||Small loan payment dishonour fee: $25|
Medium and personal loan payment dishonour fee: $15
Late fee: $5 charged daily
|Can borrowers pay the loan off early?|
|How to apply||Review and apply||Review and apply|
What are the risks of payday loans?
- Unaffordable repayments. Payday loans are an expensive way to borrow money and should only be used as a last resort. Check the size of each repayment and ensure you will be able to pay it on time. Unaffordable repayments can lead to late fees that will only make things worse.
- High rates and fees. Rates and fees on payday loans are high but there are rules in place so be sure to check your lender is not charging you more than ASIC allows. Also, look at what you would be charged if you are late on a payment or if you default on the loan altogether.
- 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.
Wallet Wizard and MoneyMe offer different loan amounts, loan terms and costs. Prospective applicants should make sure that they choose the features that best meet their needs and budget.