The best payday loans in Australia are available. But first, wise checking and a little research is needed to get to that “best” part. These loans offer the convenience of paying off each instalment on your payday. It makes sure it is paid with no consequences to both the borrower and the loan company.
They are fast, easy to pay, and are usually smaller to medium-sized amounts. But there are certain caveats similar to other fast and convenience-based loans, and they operate differently from other quick loan options available.
Do you need a payday loan? Check these guidelines first before proceeding.
How do payday loans work?
You can borrow cash fast for emergencies, immediate needs, repairs, medical assistance, or other unexpected important expenses using payday loans. The amounts will range from as low as $50 to a maximum of $5,000. This small to medium loan amount range should usually cover these types of expenses and will be enough to be easily completed and in the soonest.
Payday loans will follow your payday schedules to pay them off easier and more sure. Regular instalments will be set once you agree with the terms. Often, bad credit ratings, proof of financial capability, and other strict eligibility rules are not included. They are also mostly unsecured loans.
However, the nature of these types of loans involves additional fees, interest, and more stringent payment rules, otherwise, penalties may also be involved.
Borrow your cash as exact as needed only, set your expectations with regular instalments to avoid penalties, and finish the loan repayment as soon as possible to avoid potential debt traps. Even small loans can become quite a hassle when these payment plans get derailed from lack of planning and sure funds.
Eligibility and requirements
Payday loans are somewhat more lenient. Their eligibility scope is similar to smaller, short-term loans and BNPL type of loans due to its quick turnaround (within 24 hours), ease of getting, and convenience. Most loaning companies will let you get a quick loan as long as you’re 18 years old and up, an Australian citizen or permanent resident, and have a regular job or source of funds, including Centrelink.
However, it has a certain limit to prevent risk: one cannot borrow an amount greater than 20% of their Centrelink income. Most companies will also forgo any credit rating checks as long as you can show that you can stick to their payment each payday. Once your application is accepted and approved, loans can be released within 24 hours.
As mentioned, fees will be involved for each, depending on the terms, the loan amount, and the loan company providing the service:
- Arrears fee – This is a weekly or monthly penalty if the debt remains unpaid within the agreed loan repayment period.
- Establishment fee – Some companies put this as an additional service fee for providing fast and easy access to your cash. It is usually a small amount but on top of other fees.
- Late payment fee – Monthly penalty for not paying an instalment on time.
- Monthly fee – Some companies charge a monthly fee on top of these other fees when applicable. It’s usually like a monthly maintenance and service fee until your loan is fully paid.
The good and the bad of getting payday loans
- Fast, easy, convenient: You can get your loans within 24 hours of your application. Companies can now accept online applications in addition to by phone, and sometimes in person. You don’t have to go through credit checks and other strict eligibility criteria in order to get the loan as fast as needed. Most do not require collateral or obligate you to get secured loans.
- Covers emergencies and unexpected expenses: Get a loan ranging from $50 to $5,000 which are not available from most loan companies or banks. Either it’s too low or the process takes a while. Although banks and certain loan providers can cover within the upper ranges, it takes more effort and time. You can easily cover those needs with fewer hassles in the quickest amount of time too.
- Fees, fees: The mentioned fees above are some of the basic additional expenses on top of the loan amount you borrowed. There are at least two of them applicable, and more for penalties on not completing the loan for the allotted time, and missing just one single instalment.
- Consequences: Aside from fees are possible debt traps resulting from a domino-effect from just a single penalty fee: If you miss a payment period, you pay that week’s or month’s penalty fee, and possibly an arrears fee if the debt isn’t complete within the given timeframe. Then if it’s stretched further, the interest may kick in after, adding to the total overall. Make sure to pay attention to your payment schedule and do not miss on any to reduce bad risks to your loan completion.
Important notes when taking a payday loan
Payday loans work when the amount is smaller. Remember, borrowers pay for the convenience on top of the loan, and usually, they have higher service fees than the more popular loan types such as short-term loans and Buy now pay later (BNPL) loans.
You can also avail of other loans which may be much cheaper and lower-risk than payday loans. Often, these are already pre-existing additional services using your bank, cards, and Centrelink payments, with fewer fees, interest, penalties, and that dreaded risk of debt traps.
Are there other options for payday loans?
BNPL loans: Buy now pay later loans have been quite popular and successful in providing loans to many Australians. The amounts are smaller, there are zero to very low fees, no interest, and no collateral or secure loan obligations.
App-based / online credit loans: These are used for shopping and availing of services using a similar system as BNPL loans, but are generally app-based using debit and credit cards. If your needs can be met by any of the merchants on these credit companies, they are a good choice. Some companies have exclusive rosters with additional promos, offers, discounts, and high-value low priced items and services.
Centrelink payments and Centrelink loans: You can avail of certain services from your Centrelink payments, such as advance payments, and additional cash assistance if you qualify. There are also loans that are paid through Centrelink but carry fewer fees, penalties, and strict terms.
Bank-based services: You can apply for an overdraft on your account or card, or any of the additional funding services at low to no extra cost to bank members and cardholders. Although there may be some similar risks, most will have just a basic fee, low interest, and less strict repayment rules.