Payday loans with no credit check offer borrowers with a poor credit score the chance to be approved for finance. A no credit check loan is usually offered through short-term finance options related to unsecured loans under $2,000 or buy now pay later products.
These loan types typically have shorter repayment periods and the lender will use alternative data to assess your eligibility, such as bank statement records and detailed personal information about your current financial situation.
What is a Payday Loan No Credit Check?
Similar to a traditional payday loan, these unsecured loan products offer borrowers loan amounts from $100 to $2,000 and repayment periods from 16 days to 1 year. Unlike a traditional personal loan, they are extended to borrowers with poor or no credit who may struggle to find finance elsewhere. A low credit score with Equifax – the largest credit bureau in Australia, is a score lower than 579. A low credit rating indicates a poor financial history and suggests a more risky borrower.
The following are the features of payday loans no credit check:
Low loan amount with short-term repayment period
Borrowers with bad credit history can get payday loans up to $2,000, payable on the next payday or up to one year depending on the lender.
Available for individuals with poor credit scores
Unlike regular payday loans, payday loans for bad credit borrowers are extended to individuals with poor credit history. Loan application approval, however, is still subject to the criteria set by the lender.
How Do No Credit Check Loans Work?
The application process for these loans is typically done through an online application form or the payday lender’s app. To apply, you need to meet the following qualifications:
- Be 18 years of age
- Be an Australian citizen or permanent resident
- With contact details such as mobile number or email
- With bank statements containing the latest 3 months of regular income and expenditure transactions. Government benefits (Centrelink) shouldn’t exceed 50% of your income.
Lenders usually look at your current financial standing, source of income, and other supporting documents in making decisions for extending a loan to bad credit borrowers. As part of the application process, you’ll need to retrieve 90 days worth of bank statements using a secure tool like Credfin. This is very simple and only takes a couple of minutes to complete.
The turnaround time on the application process for payday loans is usually 1 to 24 hours. Funds are also released within hours from the approval of the online loan application and submission of the signed debt agreement.
What are the Fees for a Payday Loan if I Have Bad Credit?
Since loan products in Australia are highly regulated by Australia Securities and Investments Commission, repayment fees for payday loans no credit check are similar to small amount credit loans. The following are the fees for payday loans with bad credit:
- Monthly fee: monthly fees for payday loans has a maximum rate of 4% of the total loan amount.
- Establishment fee: lenders shall not impose a one-off establishment fee exceeding 20% of the total loan amount.
- Default charges shall not exceed 200% of the loan amount, with additional enforcement expenses charged to the borrower if the borrower fails to pay the amount due.
What Repayment Options are Available?
In compliance with government regulations, repayment options for borrowers are limited to 16 days to 12 months only. As part of the rules of responsible lending, the repayment period is determined by any responsible lender and will consider the borrower’s capacity to repay even with a bad credit score. Knowing the exact repayment period and paying off payday loans on time for payday loans would improve the borrower’s credit score and will eventually give them access to loans with better terms. The repayment amount will be debited automatically from your account as the lender will set up a direct debit at the start of your loan agreement.
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Are There Other Options Instead of a No Credit Check Loan?
Payday loans are not the only quick-cash loan and financial instruments that you can use to address current needs. The following are the alternative financing and loan options for people with bad credit:
- Apply for No-Interest Loan Schemes (NILS): NILS is a better alternative to a bad credit loan since it does not include monthly fees in your repayment amount. If you need to pay for essential goods and services such as household items, medical expenses, or car repairs, you can apply for NILS through a local provider. You can look up a list of NILS providers online. You can borrow up to $1,500 with up to 18 monthly repayments. NILS provider will still check for your financial situation to determine your capacity to pay off monthly payments.
- Credit Union Loans: A credit union loan is a good alternative to payday loans since this does not include high monthly fees. You can take out a credit union loan to 76 credit union loan providers in Australia. More than looking for your financial history, credit unions also take into consideration your standing as a member of the organization and your current capacity to pay outstanding debt.
- Department of Social Services (DSS) Emergency Relief: DSS offers emergency assistance to individuals with difficult financial circumstances. You can go to the DSS website to check for the local emergency relief provider to ask for their local relief qualifications.
- Family and Friends: Borrow money from family and friends if the option is there. This will reduce the risk of late payments and will hopefully be more flexible than a fixed-term loan.
- Overdraft: An overdraft facility with your banking institution may provide access to funds if your credit search isn’t fruitful. Like bad credit loans, you will incur fees and you’ll want to settle the overdraft balance as soon as possible.
Payday Loan No Credit Check FAQs
You can apply directly with a payday lender that offers no credit check loans. Applying directly can be cumbersome though as you’ll need to keep resubmitting applications with individual lenders until you are approved. Using a service like Friendly Finance can quicken this process up. Our online process enables you to connect to a direct network of lenders through one application. It’s free to submit a no credit check loan application and there is no obligation to proceed with the loan if you are matched with a lender.
Taking out any type of credit or loan will affect your credit score. How it affects your credit rating will depend on your payment behaviour. Your credit profile will improve if you keep on paying your payday loans (or even loans with any traditional lender) on time since this demonstrates positive financial behaviour as a borrower. However, if you fail to make repayments and default on your loan during the loan term, your credit score will suffer.