automotive finance

Payday Loans Australia (2024)

Payday loans can be tempting when you have unexpected bills or need help with short-term cash flow. They promise quick financial aid and are advertised as fast and easy. But before you take out a payday loan, it’s essential to know how they work, how much they cost, and what other options you might have.

This complete guide will give you all the facts you need to make an intelligent choice about payday loans Australia.

What are payday loans?

Payday loans, called small-amount credit contracts (SACCs), are short-term loans that lenders give out without collateral. They are meant to help you get by until your next paycheck. You can only take up to $2,000 through a payday loan in Australia. Usually, you have 16 days to a year to repay the loan.

Here’s a breakdown of the critical characteristics of payday loans:

  • Loan amount: $200 to $2,000
  • Repayment period: 16 days to 1 year
  • Unsecured: No collateral required
  • Fees: Establishment fees and monthly fees (not interest)

How Do Payday Loans Work?

The process of applying for a payday loan is usually quick and easy. This can be done online or in person with a provider. Here is an example of the flow of a process:
  1. Apply: Fill out an application and include information about yourself, your job, and your bank account.
  2. Approval: The lender will look over your application and let you know within a short time.
  3. Funds disbursement: The loan amount is sent straight to your bank account if approved.
  4. Repayment: The agreed-upon due date is when you repay the loan and fees. This is usually on your next paycheck or in payments.

The True Cost of Payday Loans

Payday loans are advertised as an easy way to get money quickly, but they have high fees that can quickly get people into a circle of debt. Here is a list of the hidden prices you should think about:

  • Establishment fees: Lenders charge upfront establishment fees, typically around 20% of the loan amount.
  • Monthly fees: On top of establishment fees, lenders may charge additional monthly fees.
  • Late payment fees: Late repayments incur additional penalty fees, increasing the loan cost.
  • Rollover fees: You might be able to “rollover” the loan into a new term if you can’t pay it back by the due date. But this comes with extra fees that raise the total cost.

Example: Say you want to borrow $1,000. There is a $200 startup fee and a $40 monthly fee, which is 20% of the loan amount. It would cost you $240 to repay the loan in full when you get paid again in two weeks. You will be charged an extra $240 in fees if you can’t repay the loan on time and choose to roll it over for another month. This will make the total cost of the loan twice as high.

Pros and Cons of Payday Loans


  • Fast access to cash: Payday loans offer a quick and easy way to access some money quickly.
  • No credit check required: Payday lenders usually check your credit differently than traditional lenders, so even people with bad credit can get loans from them.


  • High fees: Payday loans come with hefty establishment fees and monthly fees, making them a costly form of borrowing.
  • Debt trap: Payday loans are costly, and it’s easy for people to get stuck in a cycle of debt as they try to return the loan and keep adding on fees.
  • Not a long-term solution: Payday loans are not meant to solve long-term financial problems.

Alternatives to Payday Loans

Payday Loans Australia
#Payday Loans Australia

Before you take out a payday loan, think about these other options that might be cheaper and last longer in the long run:

  • Negotiate with creditors: If you’re having trouble paying your bills, try calling your creditors and telling them what’s happening. They might be open to making a payment plan with smaller payments.
  • Talk to a financial counselor: Free financial counseling services can help you budget and determine your debt management choices.
  • A cash advance on a credit card: Credit cards charge high-interest rates, but a cash advance might be cheaper than a payday loan if you can pay it back during the interest-free grace time.
  • Sell unwanted items: Do you have clothes, tools, or other things you no longer need? You could sell them online or at a pawn shop to get cash quickly.
  • Peer-to-peer lending platforms: These sites put users in touch with lenders directly, and the interest rates on these loans may be lower than those on payday loans.
  • Government assistance programs: Different situations may qualify you for government programs that can help you pay for rent or utilities.
  • Salary sacrifice: You can set up a salary sacrifice plan with some companies to save a set amount of money each pay period.

Essential Things to Remember Before Taking Out a Payday Loan

If, after looking at all of your options, you still decide to get a payday loan, here are some essential things to keep in mind:

  • Borrow only what you can afford to repay: If you take money, make sure you can pay it back when it’s due. Consider how much the loan will cost you, including any fees, to ensure you can afford the payments.
  • Read the contract carefully: Before signing anything, ensure you fully understand the loan terms and fees and plan for payments.
  • Be aware of all fees: Make sure you know about the fees before you borrow money from them. Feel free to look at rates from different companies.
  • Have a repayment plan: Make a plan to make sure you can repay the loan on time and avoid extra fees. To get money for repayment, you should cut back on costs that aren’t necessary.
  • Break the cycle: You should only get a payday loan if you have to. If you need them a lot, you should talk to a financial expert about how to get out of debt.

FAQs About Payday Loans Australia

What is the maximum amount I can borrow with a payday loan?

You can only take up to $2,000 through a payday loan in Australia.

What is the typical repayment period for a payday loan?

You have between 16 days and one year to pay back a cash loan.

Do I need a good credit history for a payday loan?

No, payday lenders typically don’t perform a credit check.

What fees are associated with payday loans Australia?

There are fees to get a payday loan, fees every month, and fees for paying late.

Can I roll over a payday loan to the next pay period?

Yes, some lenders allow you to “roll over” the loan, but this incurs additional fees.

What are some alternatives to payday loans?

You can avoid payday loans by negotiating with your creditors, getting financial advice, using a credit card cash advance (as long as you pay it back within the grace time), selling things you don’t need, using peer-to-peer lending platforms, or applying for government aid programs.

What should I do before taking out a payday loans Australia?

Before getting a payday loan, look at your other options. It would help if you only took what you could afford, read the contract carefully, understood all the fees, and planned how to repay them.

What if I can’t repay my payday loan?

If you can’t repay your payday loan, you should call the lender immediately to discuss your choices. There may be services to help people in need.


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