If you need a small amount of cash quickly, a payday loan may be an option. Whether you're covering bills, or an unexpected shortfall of cash, a payday loan may be able to get you the funds to make up the difference. Compare payday loans in Australia from 11 providers. Remember when comparing payday loans on MoneyBuddy that while we have many listed we don't have every product or provider and you may not be able to compare some payday loan features.
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Warning. These comparison rates are true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
Payday Loans Australia Explained
A payday loan is also referred to as a payday advance, a cash advance or short term loan. It is a small amount, borrowed over a relatively short period. They are often used by consumers to cover financial shortfall they may have during a particular period until they receive their next pay or over a prearranged period with the lender. They usually fall within the definition of "short-term credit contracts" contained in The National Consumer Credit Protection Act.
Payday loans are an expensive form of credit, even when compared to other types of credit like credit cards and personal loans. You do not get charged interest on payday loans, instead you are charged a particular fee according to the amount borrowed. For example, you could take out a payday loan of $100 for a term of 30 days, which charged the maximum allowable establishment fee (20% of the "adjusted credit amount") and monthly fee (4% of the "adjusted credit amount") you would be required to pay a total of $124 at the end of the first month.
However, if you were to calculate this into the equivalent interest rate, then it would be equal to 292% p.a interest rate. The same loan over a two month period would require repayments of $128, which is made by two equal payments of $64 and would equate to an annual interest rate of 218.3% p.a.
Payday Loans Credit Check
Every lender in Australia has a commitment to "Responsible Lending". Most lenders do carry out credit checks, the difference with payday loan lenders is that they do not focus as much on your credit history, they are more concerned with your ability to pay back the loan if you are approved. Lenders are expecting you to pay the loan by the end of the period, which may be as short as a month or two. Therefore the lenders are more interested in what your circumstances are now, not how your credit history looks, or how well you have paid your creditors in the past.
Alternatives To Payday Loans
Generally speaking, payday loans should be looked at as your last resort. With this type of loan there is a reasonable chance you will get into a cycle of paying one loan off to only need to get another one shortly thereafter. As this cycle repeats, a relatively small fee (or so it seems) will become a regular payment and you may quickly fall behind and become dependent on these loans. There are many other options available that should be considered before taking out a payday loan.
1) Ask Your Employer For An Advance
You might be surprised by just how willing employers are to help you out in times of need. Many will have experienced giving out advances previously and have processes set up for employees
who need such help.
It doesn't hurt to ask, and you could save yourself a lot of fees and charges.
2) Ask Creditors To Extend A Due Date
Most creditors have processes set up to help you pay them back. After all, they want their money and if that means extending your due date or helping you set up a payment plan, most will be more than happy to do so, as it means they will be getting paid! It's easy to ask, just call them up and see what they can do for you.
3) Seek Out Community Organisations & Centrelink
Many community organisations are set up to help people in distress or crisis and help you get on top of your finances by offering no interest loans, vouchers, counseling or even calling up creditors for you. It is their priority to help you, that's why these organisations exist. They also deal with this every day, so don't be embarrased or shy, if you need help, just ask. The Salvation Army, and Anglicare are just 2 of the many places that offer such services, but there are many more out there. You can call 1800 007 007 (free call from landlines anywhere in Australia) to talk to a free financial counsellor who can provide details of other options for managing bills and debts.
Centrelink also has help available, even if you are not already receiving any regular payments. Crisis type payments are available.
If you are receiving a regular payment from Centrelink, you may be entitled receive an advance on your payment, which will be in your bank account within a couple of days. You then get a small amount deducted from any future payments until that amount is paid back. You can do this online, over the phone, or at any Centrelink agency.
4) Sell Unwanted Goods
Have a look around your house and see if there is anything you don't need or don't use anymore. You could look to sell it on websites like eBay or Gumtree or take unwanted goods to a local pawn broker. Be prepared for a low price though, Pawn Shops are known for offering low valuations as it is how they make their money.
5) Personal Loans Or Credit Cards
Although personal loans and credit card debt may be unattractive options, they are still alternatives you have available to you. Even the interest on credit cards is lower than the fees on a payday loan - although there are more considerations than just interest rates and fees.
The downside with personal loans is that they can take a while for a bank to approve and if you are in need of cash quickly, time may not be on your side. The same applies to credit cards, if you don't already have one, the application will usually take at least a few days to be processed and then a further few days to be sent out.
If you still want to look at these options then visit MoneyBuddy's pages where you can compare personal loans or compare credit cards .
So Why Would You Bother Getting A Payday Loan?
There are benefits that these types of loans have over others, such as the speed of delivery. Most payday loan lenders in Australia claim to offer quick approval and quick delivery of funds.
All lenders are required by law to undertake investigation (and verification) of your persoal circumstances before they can approve your loan application. Whilst payday lenders may claim a quick turnaround, you should remember that they will take some time in order to comply with their legal obligations. They are unable to provide "instant" approvals or delivery of funds to you.
You can also get some payday loans from lenders who say that they do not undertake credit checks, which means if you have bad credit history or no credit history, you may not have the problems obtaining the funds you would otherwise expect.
Keep in mind that due to the high costs of these payday advances they should not be relied on in the long term. Payday loans should be regarded as a last resort.
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Payday Loans: Genuine personal loan alternative?
Category: Payday loans