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Payday Loans Australia

What are Payday Loans Australia?

Payday Loans Australia are loans amounting to $100 up to $2,000, with a payment term of 16 days to 24 months. Repayment terms for payday loans are usually aligned with the borrower’s pay cycle. Payday lenders can be found online from websites such as Jacaranda Finance, Sunshine Loans, Fair Go Finance, and Credit 24.

To check if you are dealing with a legitimate payday lender, you need to check if the lender is holding an Australian Credit License.

Am I Eligible and What do I Need to Apply?

To apply for payday loans, you need to meet the following basic criteria set by a typical loan provider:

  • Be an Australian citizen or permanent resident of Australia
  • Be at least 18 years of age at the date of the loan application
  • Currently receiving regular source of income for at least 3 months
  • With 90 days of bank statements, or active bank account and bank statement showing regular income and expenditure transactions within a 90-day period
  • If you are receiving Centrelink benefits, the benefit should not exceed 50% of your monthly income
  • For payday loan lenders, the borrower’s current financial situation matters more than the credit score and credit history of the individual. This is due to the loan repayment terms for payday loans Australia being shorter than the regular personal loan.

Application Process

The application process for payday loans only takes a couple of minutes to complete online. The following information will be asked to complete the application:

Personal details such as your identification information, email account, and contact number

Employment details such as your 90-day income history through personal bank statements extracted online. This is to ensure that the borrower will have enough capacity to pay off loans over the repayment period.

Loaned amount to be obtained from the lender.

The pre-approval decision will be provided by financial institutions based on the submitted information within a few minutes of completing the application form. After the initial qualification process, the lender may ask for additional information such as proof of current income, income statement, and valid identification such as an Australian Driver’s Licence or passport. A credit check may also be carried out.

Once the borrower passes the eligibility criteria, the proceeds of the fund will be sent to the borrower within 24 hours from the time of approval. In some cases, it can go as long as 3 business days for the funds to be released.

Payday Loan Costs

Fees and costs associated with Payday Loans are highly regulated by the Australian Securities and Investments Commission (ASIC). The following are the additional costs associated with repayment of payday loans:

  • Establishment fees: The establishment fees for payday loans should not exceed 20% of the total amount borrowed.
  • Monthly fees: The maximum monthly fees associated with payday loans will not exceed 4% of the total loaned amount per month.
  • Default fees and charges: all charges to be imposed by any responsible lender and credit providers in the event of borrower default and late payment should not exceed 200% of the total loaned amount.

Loan Term and Repayment

A payday loan (loans amounting to $2,000 below) can have a monthly repayment term of 16 days to a year. Some payday lenders offer direct debit arrangements to help the borrowers regularly pay off loans once their salary has been credited to their account.

Who Uses Payday Loans in Australia and For What?

Payday loans Australia are for individuals looking for financing in a short period of time. Payday loans can be borrowed by qualified individuals with stable employment (at least 90 days of payment history) and individuals with a bad credit history or rating.

The appeal of payday loans is based on their flexible repayment term and the shorter repayment period. It is also an unsecured personal loan, which makes it more accessible and more convenient whenever you need the extra cash from traditional lenders for emergency bills or financial emergencies such as medical expenses.

Alternatives to a Payday Loan Australia

While payday loans are convenient and accessible anytime and anywhere (due to the online application process set by lenders), payday loans may still not be the best choice for you based on your current financial standing. The following loan product and solutions are the top alternatives to taking out payday loans.

Centrelink advance payment

If you need cash to fulfil your current financial needs, you may apply for an advanced payment of your Centrelink benefits such as Family Tax Benefits or income support. If you are currently receiving Centrelink payments and other similar government benefits, you may qualify for the advance payment benefit free of interest or fees. You can send your application through the Service Australia website.

Credit cards

Credit cards are an excellent financial alternative to payday loans if you need to cover any unexpected bills during a difficult time. The advantage of using credit cards is that it provides the user with an open line of credit. Users will not be compelled to submit applications every time they need to take out extra cash.

However, if you fail to pay off all amounts due every month, you are exposing yourself to costly interest rates that can go up as high as 22% annual percentage rate. Credit cards may also include annual or monthly service charges.

Overdrafts

If you need to cover for an immediate financial need, you may rely on overdrafts on your current loan accounts. This will help you conveniently address financial gaps without having to apply for another loan. Once you pay it off, it will still be available for you as an additional means to address future emergency expenditures.

However, this is not a guaranteed financial means to address financial shortages since you need to have a positive relationship with your lender or bank to get an overdraft. You should also have an excellent credit rating to prevent yourself from being turned down by the bank.

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